What Are the Financial Considerations When Buying Property in Cyprus?

When you are feeling financially overwhelmed and out of ideas, talking to a professional might seem like an unnecessary expense. This may be your first foreign purchase. They will know what it’s like to be in your position. A professional can help you save money and reduce the property buying stress.

Gather a team that is solely acting in your interests. It should consist of an IFA, Smart Currency Exchange, and a lawyer. The Property Guides Resource Center is a great resource for finding an honest and reliable financial adviser.

Want to know more about the financial considerations when buying property in Cyprus? Then check out this article!

Planning the purchase

Be sure to arm yourself with good financial advice. Do this before you even think about looking for properties in Cyprus. The way you structure a purchase could have major implications on how much tax you will pay. Remember, you can get two sets of allowances if you put the property in two names.

These are the things you need to do if you are from the UK:

1. You should inform the HMRC if you are leaving permanently or for at least one tax year.

2. Fill in your tax return (P85). Make sure you are correctly claiming all the credits that are available to you.

3. Your residence status needs to be confirmed. You must spend more than 183 days in the country per year to qualify for residence. 

4. It’s important to consider the tax efficiency of receiving income from abroad.

5. British people retiring to the sunshine and warmth of Cyprus can save money by taking advantage of tax-efficient schemes.

There are a number of financial considerations that you will need to take into account when buying property in Cyprus. The cost of living in Cyprus is much lower than other popular Mediterranean islands such as Mallorca or Malta.

Setting your budget

The cost of living in Cyprus is much lower than other Mediterranean islands. You can find property at an affordable price, and living costs are also quite low. 

Let’s say you’re looking for an apartment in Paphos. It can be rented for €300 per month or bought at around €1 400 per square meter. Two-bedroom apartments start at €100,000. Three-bedroom villas with pools, start at €200,000.

You can get a great property at an affordable price. Just look for properties to purchase in more budget-friendly areas. Check out RICS’ quarterly price index. It has the most up-to-date information on property prices in Cyprus.

When setting your budget, remember to allow buying costs of around 10%. While you might be able to negotiate on the asking price, it’s unlikely that you will get any serious discount. The days when people got more than 5 or 10% off are over and won’t come back anytime soon. It will happen only if there is a major shift in the market conditions.

Purchasing your property with cash

The fastest way to buy a property is with our own money. It is the best way of avoiding the interest and arrangement fees of mortgage lenders. Maybe you have some savings or you are able to sell an investment?

Some changes happened in Britain recently. You can now use your tax-free portion of a monthly pension payment to purchase property in Cyprus.

Many British retirees are downsizing to a smaller property in the UK. They are keeping a smaller property as an investment and “safety net” of their wealth. That way they can keep their capital safe. By doing that, they can afford to eventually buy a home in Cyprus once they retire.

Getting a mortgage

You don’t think you can afford a property in Cyprus? Well, it might be time to rethink. We live in a globalized financial system. Many financial options are available to us. 

UK lenders are more likely to work with Cyprus-based borrowers. It is because of the close historic ties and shared legal systems. Nevertheless, you will be expected to pay a 30% deposit. You also need to agree on mortgage terms that end before your 65th birthday. You will have a repayment mortgage unless the property is under construction. 

Cyprus has a reputation for being an international tax haven. We recommend that you open a free, no-obligation account with Smart Currency Exchange. This company will work in partnership and help coordinate the process of moving funds into the local currency.

Opening a bank account in Cyprus

You’ll need a bank account in Cyprus to purchase or rent property. Cyprus was struck by a banking crisis in recent years. The Central Bank of Cyprus has been maintaining an updated list of approved local banks.

There are Cypriot banks with branches in the UK. You can open an account before you leave the UK. The British bank, Barclays, is also present in Cyprus. 

Cypriot banks are also known for their high fees. It’s important to know exactly what those extra costs actually are. To open an account, you will need your passport or an EU driving license.

Conclusion: Your finances need to be in order before buying property in Cyprus

This could be your first foreign purchase. There are several financial considerations that you will need to take into account. Remember that the process is different in each country. When you’re ready to buy, be sure that your finances are in order. This includes getting comprehensive financial advice before even looking at properties in Cyprus. You can get a property in Cyprus at an affordable price. Living costs are low too. Still, think through all the possible options and assess your finances before buying.