Cyprus Property Forum for Buyers, Sellers & Investors

Hello
I have a little capital and i am wondering where to invest it-so i am thinking of buying a property as an investment-receiving monthly income and appreciation in value during the next years-at least a little secure against inflation.
But before doing this,i want to calculate my expanses.
So how many tax i should pay ?
If i use this link http://www.cybarco.com/annual-property- ... -in-cyprus ,the taxes are 4:
a) Immovable Property Ownership Tax -this is payed in the Inland Revenue Department of the Republic of Cyprus
b) Local Authority Fees -What is this tax ?-this is for the community pool and maintenance or.........?
c)Municipality Tax-Municipality tax is payable to your local municipal authority.
d)Sewerage Tax -this suppose is for the garbage and so on
All this taxes include community pool and gardens(if they have) or not ?
So can we make a calculation of possible expanses ?
For example i will use this property
(This is just a example),the price is 99 000 euro and has 96.16 square meters.
So how much approximately are my taxes annually(approximately) ?
If i use tax calculator(on the property page)-it shows me:
-Immovable property tax (anual payment) 75€ (0.08%) this tax is too little,so i suppose is this Local Authority Fees
-Municipal tax (anual payment) 250€/year (0.25%)-it is % or fixed ?
We can add Immovable Property Ownership Tax(this that is payed to Inland Revenue Department of the Republic of Cyprus)-the price is 99 000-so it should be - 240 euro(0.60 % of 40 000) + 472 euro(0.80 % of 59 000(difference between 99 000 - 40 000)= 712 euro
-Sewerage Tax-Where i can find it is % or fixed ?-i read between 250 and 500 euro annually-i will write 500 euro
-Tax for maintenance of the complex(swimming pool,gardens) -for this one,it should be 100 euro per month or 1200 euro annually
So my total tax are:
-Immovable property tax (anual payment) or Local Authority Fees 75€ (0.08%)
-Municipal tax (anual payment) 250€/year (0.25%)
-Immovable Property Ownership Tax(this payed in Inland Revenue Department) 712 euro
-Sewerage Tax-500 euro
-Tax for maintenance of the complex(swimming pool,gardens)-1200 euro(100 per month).
Everything total 2737 euro(without taxes on the rents,insurance of the property,vacancy rate,cost of the management of the property and maintenance of the property(every year you should invest between 3 and 5 % of the income in the renovation of the property) or close to 3 % of the price of the property(only taxes).
Are my calculations write or are under/over valuated ?

Hi hitman & welcome to the forum.

Please do not post advertisements here (the appt in Anarita).

Local property taxes are based on a property's 1980 value, which re shown on the property's Title Deed.

You can forget Immovable Property Tax as it is being scrapped next year.

The taxes you will pay are to the Municipality or Community in which the property is situated (I pay 0.2% of my property's 1980 value) and the Sewerage Tax - in the region of 0.3% and 0.35% of the property's 1980 value. (In areas where they are building/planning to build centralised sewerage system you will be required to contribute towards its cost. I have no figures for this as again it varies.)

If you buy an apartment or a property in a complex that has common facilities such as lifts, swimming pool, tennis court, sauna, gym, etc. that are available to all the owners, you will pay an annual fee to a 'Management Committee' that is responsible for the insurance, maintenance, and repair of the common facilities plus electricity supply to common areas, lighting in stairwells, lifts, etc. The annual fee varies hugely depending on what facilities are available.

I wouldn't bank on receiving sufficient income from renting to cover your costs, particularly if your looking at a small holiday apartment (as shown in the ad). You would do better to invest in a residential property where you may be able to rent it on a long-term rent. Average gross rental yields for residential houses and apartment are 2.0% and 4.0% respectively (assuming you have 100% occupancy). This return is low compared to other overseas locations and suggests that there is still room for some re-pricing of capital values to take place,

No statistics are available for holiday/second homes, but they will be considerably lower than yields for residential properties.

Regards,

So my calculation are not correct.
The taxes are:
Immovable Property Tax(even that will be removed next year)
Municipality or Community tax
Sewerage Tax
All this are based on the value of 1980 even if they are new(build 2016)-This i didn't know

So the taxes will be:
Immovable Property Tax(even that will be removed next year) 100 euro
Municipality or Community tax 250 euro(approximately)
Sewerage Tax 250 euro (approximately)
So all taxes-close to 600 euro(i didn't include maintenance of the pool/gardens,because i am not sure will i buy with or without pool).
1)So,what is the income ?
If i use this http://www.news.cyprus-property-buyers. ... d=00119066
RICS Cyprus Property Price Index 4Q 2015 the average price of apartment in Paphos is 96 545 euro and the rent per sq meter is 3.24 euro.
For example is i have a 100 sq meter apartment,the rent that i can take is 324 euro-is this correct ?
2)Is there any sense to buy a apartment in the complex(with pool,gardens and so on).............or the maintenance of the complex will take a huge part of the rent and will diminish my profit ?

Hi hitman

I guess that the 1980 value of a 2-bed apartment would be in the region of €22,000 - €28,000, so your tax calculations are a bit high. (My 220 sqm bungalow with a 50 sqm double garage has a 1980 value of €60,000 - I took delivery in 2004).

Using the RICS Index your calculations are correct - assuming you have 100% occupancy. For a tourist apartment 16 - 20 weeks occupancy would be more realistic. Here's the specification of apartments that RICS uses in its calculations:

Residential – Apartments
Ø City centre,
Ø Non tourist areas,
Ø Two-bed,
Ø 65sqm (minimum size for city centre apartments)+13sqm (covered veranda)+6.5sqm(common area),
Ø One covered car parking space,
Ø Storage area,
Ø Concrete framed/single leaf brick wall (200mm)
Ø Ceramic floors,
Ø Built-in wardrobes,
Ø Double glazing,
Ø 10 apartments in building,
Ø On the second floor (from a total of four floors),
Ø Only residential uses in the area,
Ø Good quality kitchen,
Ø One bathroom,
Ø Central heating,
Ø Split unit AC

(Apartments are in good condition with Title Deeds).

As well as maintenance fees you'll also need to consider furnishing, insurance, cost of cleaning the apartment between lettings, rental agency charges, electricity - water - telephone/Internet charges, repairs/breakages and redecoration.

Regards,

Thanks for the reply
1)Do you have other sources of info(price/rent per sq meter) other that RICS Index ?May be association of Cyprus brokers or.........?
2)When i checked are the prices are real(price per sq meters,rents per sq meter.......) i am little confused.
According to RICS Index,the average price per sq meter in Paphos is less that 1200 euro(average price 96 545 euro for apartment 85 sq meter or 1135 euro is a want to be 100 % correct).I checked several properties from different agencies.......and i can confirm that this is correct-even you can find good properties for 900 euro per sq meter-I am speaking about apartments.
But on the rents,the picture is a little different-the price of rent per sq meter is 3.25 euro or 274 euro for 85 sq meter(typically 2 bedrooms) or 178 euro for 55 sq meter(typically 1 bedroom)-this is my target.
But when i cheeked the same agencies for rents-it is very hard to find something for 150-200 euro(even that this should be the price of average rent,if we use data of RICS Index-they started from 200 euro for Studio,250-300 euro for 1 bedroom,350-450 for 2 bedrooms-the data/my calculations are not correct or.........?
3)My target is 55-60 sq meter apartment for 50-60 k euro in on of the biggest city of Cyprus(may be Paphos)-what is the average rent/income that i should expect from it ?

Hi hitman

As far as I am aware, RICS is the only organisation that produces price, rent and yield figures for Cyprus - it uses a methodology developed by Reading University in the UK.

As RICS says in its report "The parallel reduction and/or stabilisation in capital values and rents is keeping investment yields relatively stable and at low levels (compared to yields overseas). This suggests that there is still room for some re-pricing of capital values to take place, especially for properties in secondary locations."

Rather than setting a target for the property (55-60 sq meter apartment) you wish to purchase I suggest you think about your target market - i.e. who do you think will want to rent a property. That will make you think about what type of property you need to buy and where it needs to be located to attract your target market.

I also suggest you speak with an IFA (Independent Financial Advisor) about investments.

Regards,

And what about title deeds ?
I was shocked to understand that people can hire a Cyprus attorney and to be scammed.
If i follow the advises and hire attorney who:
-is recommend/in the list of British High Commission in Nicosia
-have a solid background check on him and looking for recommendations
-Who has a Professional Indemnity Insurance
(Of course am aware not to use "free legal advises from agencies/developers",but to use my own and never to buy a property in development-big risk never to be finished and never to receive title deeds).
Will i have any problem with title deeds and how long typically i will receive them(i suppose that it is not necessary to pay more for this or ) ?

Hi Hitman

If you purchase a property that has already been issued with Title Deeds, an EU citizen can get them within a matter of a few days once they've paid the Property Transfer Fees (and the vendor demonstrates that he's paid outstanding property-related taxes and sewerage charges).

Non-EU citizens have to apply to the 'Council of Ministers' for permission to own property - I have not heard of anyone who's been refused. But they can still buy a property and lodge their contract at the Land Registry, which prevents the vendor changing their mind about the sale or selling the property to someone else. Once permission has been granted, they can get them within a matter of a few days once they've paid the Property Transfer Fees (and the vendor demonstrates that he's paid outstanding property-related taxes and sewerage charges).

If you buy a property without Title Deeds, you have to wait until they've been issued before you can own the property. In Cyprus this can take a long time (I know people in Paphos who've been waiting for their deeds since 1979.)

If you buy a property 'off-plan' then it takes around 8 - 10 years to issue Title Deeds. And if the developer breaches the terms and conditions of his planning and building permits or encroaches on someone else's land, then it may prove impossible to get the deeds until the problems have been corrected - or you get the Title Deed with a 'mark' preventing you from selling until the problem has been corrected.

I published a list some years ago about the essential tasks your Cyprus must undertake as a minimum:

(a) For all types of property

• Confirm that the person selling the property is its legal, registered owner.
  Confirm that the property is free from any claims/encumbrances (such as a mortgage) and prohibitions. If the lawyer finds any encumbrances or prohibitions, they should advise you of the risks they present and possible steps that may be taken to protect your interests.
  Confirm that the vendor is in a position to deliver title of the property to you.
  Ensure there is free and legal access to the property from a public highway.
  Deal with your obligations to pay property taxes in a fair manner.
  Draft and finalise the legal contracts.
  Arrange for the payment of Stamp Duty and the stamping of the contact at the tax office.
  Deposit the signed contract at the Land Registry for Specific Performance.
  Ensure that the vendor pays any taxes due by him, thereby ensuring that a tax clearance certificate to be issued.
  Check that the property is not affected by town planning proposal. Unlike the UK, getting a formal written statement from the planning authority is not possible. The best that can be expected is an informal, non-binding, off-the-record comment from one of the officers. A lawyer will be able to advise buyers about the zoning of the area, the building capacity and density, but not if a neighbour has applied for permission to start up a pig farm! And as the zoning may change, a lawyer would not be able to offer guarantees on this aspect of a purchase.
  Facilitate the transfer of ownership of the property from vendor to you and the payment of Property Transfer Fees.

(b) For ‘off-plan’ property (property that is bought before it’s been built or during construction)

• Establish the credentials and credit worthiness of the developer.
  Confirm that the necessary Town Planning Permission and Building Permits have been issued for the construction of the property.

(c) For resale property

• Ensure that the property is shown on the Title Deed.
  Obtain a structural survey and professional opinion on the asking price from a RICS surveyor.

(d) For land

• Establish the precise location of the land.
  Establish that the land may be used for the buyers intended purpose. As planning applications can only be submitted by the legal registered owner of the land, all that can be expected is an informal, non-binding, off-the-record comment from one of the planning officers.
  Obtain a survey of the land to assess its suitability for the buyers intended purpose.

(e) For properties sharing common facilities such as entrance halls, stairways, exterior walls, swimming pool, tennis courts, gardens, etc.

• Determine whether the required administrative committee for the management of the common areas has been established.
  Draft and finalise the legal contracts associated with the payment of management fees and insurance of the common facilities. (This only applies to resale property as there cannot be a management committee for properties that do not exist. For off-plan purchases, provision should be made for the establishment of such a committee with responsibility for common areas resting with the developer until such time as the committee is formed).

I also published a one-page property buyer's checklist.

Regards,

Thanks Nigel for everything.
I understood everything that i need.
P.S
Your site and forum is very useful and informative-keep going

You're welcome hitman.

Regards