Cyprus the third largest island in the Mediterranean has not seen many of the downsides of a slowing property market seen eslewhere in parts of Europe. Cyprus seems to be on a boom that does not seem ready to stop and with the island's ascension to the European Union and the restrictions being lifted for Europeans to live and work on the island, expat demand for property in Cyprus is expected to increase.
Southern Cyprus is favoured by retirees because of its hot, dry summers and mild winters – not to mention its preferential 5% tax rate on pensions and with English widely spoken this island makes for an ideal location from many aspects.
The Cyprus property market will also benefit from the recent introduction of a 15% VAT on all property purchases in accordance with the “acquis communautaire”; the VAT is expected to increase property prices by an immediate 5%.
Cyprus changed their currency to the Euro in Janaury 2008 which is being seen as highly beneficial to the island’s property market and the change means that interest rates are likely to coem down as this will be seen as very beneficial to the local buying market as well as the expat and investor market.
Prices may increase by as much as 50% over the next year or so acoording to many analysts who have been predicting a dramatic growth in the property market of Cyprus. In that the island naturally has limited land space these predictions are quite likely to play out as larger portions of the nation are developed and less space is left for further construction projects to take place which in turn strengthens the market.
Property costs
Property prices in Cyprus start from about £77,000/ $150,000 US but property is fast catching up price wise with the in more established retirement hotspots such as France and Spain. Stamp duty is 0.15% for properties worth up to about £130,000/$260,000 US and 0.2% on more expensive homes. Property transfer fees may also be applicable and it is wise to check before buying. Retired EU nationals do not require a visa to move to southern Cyprus, but they do need a temporary residence employment permit that should be applied for on arrival. Those wanting to buy property must also prove they have adequate income or financial resources to live without working. The minimum requirement is about £8,000 a year.
People from other EU countries are entitled to be able to use the available public health system since Southern Cyprus has now joined the European Union. A few state residential nursing homes or hospices for the terminally ill exist on on the island but many expats would be better of returning home in such emergency situations.
Retired residents from overseas are taxed on their pensions at the rate of 5% above about €3,417 (£2,554) a year, whether it is a state, company or personal pension. To qualify for the low rate, you must have lived in the country for at least 183 days.
Alternatively, you can pay the normal rates, in which case the first €19,500 is tax free, rising to 30% on €36,301. So the smaller your income, the better off you are under the normal system.
Remember that if you continue to have assets in Britain, such as bank accounts or an investment portfolio, you will still be liable for UK tax on any income, even if you are resident in Cyprus. Many retirees therefore move their assets offshore, and then bring the income into Cyprus, in which case there would be no tax to pay, according to Jonathan Spring-Rice of adviser Towry Law.
British retirees will also be attracted by the fact that Cyprus abolished inheritance tax in 2000. However, to benefit from this, expatriates will have to prove they have severed all links with Britain – and this may not be as easy as you think.
It can take more than five years and involves closing down all accounts and selling all UK property, and cancelling your registration with your doctor and dentist, among other things.
|
