Purchasing properties in Cyprus

Cyprus law is based on British law; many of the components of the purchase process are similar. The purchase process includes; the deposit, contract, legal, stamp duty & RETT. All property in Cyprus is Freehold; you own the property and the land it’s built on. In the case of apartments you own your share,

RETT (real estate transfer tax)

The tax value wise is more akin to our stamp duty. Title Deeds are issued in your name after your lawyer obtains the Council of Ministers consent. This is a formality for EU citizens and should take about six months to obtain (we are aware of instances where this is longer, it might well be a positive), it doesn’t prevent you from selling plus you hold on to your money for a little longer! On receiving the title Deed, the RETT is due immediately.

A foot note on stamp duty and legal fees;

Please be aware that clients will be expected to pay their stamp duty within 30 days of signing their contract for the purchase to be registered. Also the bulk of the legal fees will have to be paid upfront. The actual stamp duty is on average about £250.

In Cyprus, by law every contract registered with the land registry is protected by ‘specific performance’. Once our client has paid 30% of the value of the property it (the property) is then removed as an asset of the developer. In effect the developer cannot sell it, halt construction or illegally amend the contract.

Allow in the region of 11% of the purchase price for associated closing costs

 

Purchasing properties in Spain

Despite the relatively few horror stories thousands of British people have successfully invested in Spain; the process is straightforward though differs from the UK, and we always recommend with all matters legal, no short cuts or cost cutting when it comes to legal advice.
The process and conveyance procesure; Nota simple, (Legal description of the property), Mortgage or finance, closing and taxes. *TheNota simple informativo; this is supplied from the Property Registry (Registero de la Propiedad) this shows the property is free from debt (in Spain debts can be attributed to the property )that it legally belongs to the developer/vendor and that the description of the property is correct. The Notary prepares the title deeds (Escritura), and registers the property. The associated costs are Spanish IVA [VAT at 8%], 1% registry costs, 1% legal fees and 1-2% in the event of a mortgage. So count on 11/12% additional costs in addition to the purchase price.

We recommend, and your lender (if you require finance) that our clients employ an International lawyer with experience of purchasing Spanish property – or an English-speaking Spanish lawyer (Abogado). We are happy to introduce you to Lawyers, we are happy you provide your own. We at Compass Amazing Resorts do not take commission from Lawyers-in the event there is any conflict or automatic payment due we will inform our clients. The Lawyers make the necessary searches to ensure that the land belongs to the Vendor, is free of charges, and have the necessary planning and building permission and that the Contract is fair and legal. Once the transaction is completed they will arrange for the title deeds (Escritura) to be transferred into the purchaser’s name.

Buying a property in Spain can be most straight forward, hire a good lawyer (who works for you, not us, not the owner or the developer) and allow circa 10% of the purchase price to cover the additional costs of purchase move in and enjoy!

10% IVA or Transfer Tax
1% Notary and registry
1% solicitor’s fees
1% GDA (Legal fees)
1% IF you require get a mortgage

Let us explain in detail:

Strategy
We recommend a simple, effective strategy to purchasing and that is to always be aware and bear the responsibility for being aware of all the costs associated with purchase. If someone tells you ‘don’t worry about that’, or ‘that’ll be sorted when you complete’ politely ignore what they are suggesting and deal with simple facts. A good lawyer working for you with your interests at heart is the most effective solution.

Buying a property is always emotive, our hearts often rule our heads and with that in mind we so often know exactly when we’ve found the right property. Getting caught in the emotion of the purchase is fine and safe if you stick to your strategy. On the very rare occasion a property has complex legal problems attached to it I’d walk away- and find a new one.

Here we explain all the different types of costs, please bear in mind that the actual cost of your investment will depend on your particular circumstances. At this stage may I offer the standard disclaimer that all our advice is a guide and not a substitute for professional, independent legal advice.

Costs associated with buying property in Spain
As with the UK there are costs and taxes involved in purchasing a property in Spain depending upon whether you are investing in a new build new property direct from the developer, or a resale property from a private individual or direct from the bank you will either have to pay:
• VAT (IVA)& Stamp Duty
• Or a transfer tax
Direct from the Developer (new build/off plan)
VAT & Stamp Duty (IVA & Actos Jurídicos Documentados – AJD)

These taxes apply when the property is being sold for the very first time direct from the developer. The VAT levied (IVA in Spain) is 10% on the purchase price of residential homes (villa’s , apartments etc) The Stamp duty ( AJD) is 1% of the purchase price. Both VAT and Stamp Duty are paid by the buyer.
Re-sale (normal listing from a private seller or the bank)
Transfer Tax (Impuesto sobre Transmisiones Patrimoniales – ITP)
ITP is for pretty much all listings that are re-sales (most of our stock)
This tax applies if the property is deemed to be a second or posterior transfer. The Transfer Tax is 7% on the price of the purchase in most regions, but as of last July (2010) there are plans to put it up to 8% in some regions like Catalonia. The transfer tax is paid by the buyer. If any deposit is paid before completion of the sale it is not subject to the transfer tax. However the full amount of the transfer tax still has to be paid upon completion. In this scenario there is no VAT to pay, and stamp duty is already included in this tax.

Income Tax Provision When Buying From Non-residents
If the seller is not a Spanish resident, the buyer has to withhold 3% of the purchase price and pay it to the tax authorities (application form 211). If this is not done the property will be considered by the tax authorities as the asset backing the capital gains tax liability of the seller. This condition is very unlikely to apply when purchasing from a developer.

COSTS
Legal Fees
As you’ll hear Compass Amazing Resorts Limited mention , buying a property in Spain can be most straight forward, hire a good lawyer (who works for you, not us, not the owner or the developer)
Over the years we’ve seen people spend more money on a flat screen TV than a Lawyer-does that make any sense!

Your lawyer (Abogado) drafts and reviews contracts on your behalf and can explain all the legal, administrative and conveyance issues you face. The conveyance should include any necessary due diligence (checking ownership claim of the seller, charges on the property, permits, etc.) and arrange all the required legal documentation to complete the process this will include the property registration, tax payments, etc.). As indicated allow circa 1% of the purchase price for these services, look either for a good hourly rate a fixed cost for the work. Most of our deals have fees ranging between €1000 and €2,500.
Mortgage/Finance costs
A lot of investors choose to draw down from a UK based asset (effectively turning them into cash buyers in Spain) If you require finance in Spain expect as stringent checks as in the UK and to have a large deposit (circa 20/30%) Proc/set-up fees are common. There is usually some kind of set-up of around 1% of the value of the mortgage. Finally a mortgage will increase the Notary expenses.(Please note Compass Amazing Resorts does not take commissions for these services, in the event of their being an automatic payment to the introducer we will inform our clients).

Estate Agents Fees
As with the UK Estate agency fees or commissions are paid by the seller be that a private individual or a bank.

Notary Expenses
Notary expenses are nearly always paid by the buyer and are calculated in direct relation to the purchase price. Allow 1% at the worst of the purchase price declared in the deeds of sale for Notary Fees. In many cases however Notary fees are more like 0.5% of the price on the deeds.

Property Registry Fees
Expenses related to inscribing the sale with the land registry are also nearly always paid by the buyer, and are calculated in relation to the purchase price declared in the deeds of sale. To be on the safe side you should calculate at 1% at the worst, in reality these will be circa .5% (of the purchase price declared in the deeds), though once again it depends upon each individual property and area, and the fee could well be considerably lower.

In Spain they are not as obsessed with surveys as we are, though we would recommend going to the expense to be sure there are no surprises. The property should be fine and (if there was a mortgage on it before) and have been checked by a lender –however better safe than sorry! So with all the above in mind and based on our considerable experience allow circa 105 in addition to your purchase price for associated costs.

 

Purchasing properties in Portugal

Purchasing in Portugal;Contracto de Reserva ( the reservation contract) is a short contract where you pay a deposit (around €3,000 – which is taken into account with the sales price and deducted from the final amount), this payment secures the property for between 2 to 4 weeks. Your lawyer gets to work on all the conveyance, again we are happy to introduce you to Lawyers, we are happy you provide your own. When everything is in order you then sign a promissory contract. The checks your lawyer will undertake include: Land registry, debts on the property, that the seller is legally entitled to sell the property; guarantees, planning, construction, licenses and checks on the contract of sale are also included.
After this process an offer to buy is formally drafted by your lawyer, with your consent; you then create a legally binding document with the vendor/developer.

Please note the preliminary/ promissory purchase contract (Contracto Promessa de Compra e Venda) is your legally binding purchase agreement. This is then followed by the contract of sale. You may opt to sign a Power of Attorney authorizing your lawyer to sign on your behalf in your absence, you may also require a tax number (again your lawyer can arrange this for you) The Notary will prepare the final contract of sale and title deed. Allow 6-7% of the purchase price for associated costs in purchasing.

Purchasing properties in the US

The law relating to purchasing property in Florida is not dissimilar to the UK, as both systems are based on common law.

The sale of Real Estate in the US is always governed by the State where the property is located. The form of ownership is known generally as in ‘fee simple’, we would refer to this as ‘freehold ownership’. When a building is on a development of flats (for example) this is called a ‘condominium’.

Transfer of property ownership (real estate) is completed by deed, not dissimilar from the UK. The whole process usually begins with a written agreement; your lawyer will ensure this agreement is subject to various stipulations, title and deed examination, the necessary home checks and completion dates.

As with the UK, there are costs involved in the purchase of the property. These varies from region to region allow circa 4-6% of the sales price of your property. The type of costs can consist of; application fees, appraisal fees, county tax, credit report, documentation fees, escrow, loan fees and insurance premiums.

Florida guide

Florida guide

You can own properties via Company (corporation) or a LLC (Limited liability
Company) Offshore or even a Trust. To our knowledge none of our clients have done
thus so again; please take the necessary professional advice
If you intend to move to Florida you will need to be well versed in the requisite Tax &
Pension issues.

Finance, and if so in which Country-re-mortgage in the UK or perhaps a personal
loan or a mortgage Stateside. Which is most beneficial to you? We hear of great deals
in Florida, if you have a large enough deposit (circa 30%) and you’re young enough
we’ve heard of 30 years deals at a fixed 5.5% US deals are almost exclusively on a
repayment basis (not the interest only versions that proved so popular during the
boom)-chat with the Lawyer than contact a broker-hopefully you’ll be thrilled. How
about a draw down or remortgage of the UK property? Usually easy to arrange; my how
times have changed. Surprisingly though we hear of plenty of people who were
pleasantly surprised at how easy it still is for people with perfect records to gain
access to finance. So ‘easy’ –that’s a benefit –quick, turns you in essence into a cash
buyer. One final benefit is your repayments are in Sterling in the UK so negate any
currency fluctuations.

The all important structure of the purchase, if this is an investment what is the exit
strategy you could save thousands by minimizing your tax liabilities and costs.
Unless you have an International Law firm you can’t use your local lawyer to look
after these transactions-though obviously an expert in your town they will not
understand fully the system?)In essence the only way they could assist is to call an
affiliate in Florida (probably two fees to you)
The days of looking for the ‘brass plaque’ and arranging a meeting are over, you can
easily find a reputable expert via the internet and get the ball rolling.

The cost of buying a property
The cost of buying a property the law relating to purchasing property in Florida is
not dissimilar to the UK, as both systems are based on common law.
The sale of Real Estate in the US is always governed by the State where the property
is located. The form of ownership is known generally as in ‘fee simple’, we would refer
to this as ‘freehold ownership’. When a building is on a development of flats (for
example) this is called a ‘condominium’.

Transfer of property ownership (real estate) is completed by deed, not dissimilar
from the UK. The whole process usually begins with a written agreement; your
lawyer will ensure this agreement is subject to various stipulations, title and deed
examination, the necessary home checks and completion dates.

As with the UK, there are costs involved in the purchase of the property. These varies
from region to region allow circa 4-6% of the sales price of your property. The type of
costs can consist of; application fees, appraisal fees, county tax, credit report,
documentation fees, escrow, loan fees and insurance premiums

TIN/ITIN
You’ll need to obtain a tax identification number (TIN or ITIN). This can be obtained
from the IRS (Inland Revenue) fill in a form and wait-shouldn’t be a problem though
many prefer to have their lawyer take care of it.

COMPASS AMAZING RESORTS TOP TIP: KNOW YOUR HOA FEES
Communal charges/ Homeowners’ Association
As mentioned before in Condo’s and shared apartments and other property with
communal areas there is a monthly charge. Look closely at this; on occasions it can
be akin to a small mortgage! Not necessarily a problem (remember this is a cost
controlled more often than not by you-the home owners). I’ve seen examples of
Condo communal fees reaching hundred of dollars per month then; on close
examination they contain various communal amenities such as a pool and Spain including
buildings and hurricane insurance and all your power -on reflection very
fair?

HOA
The Home Owners association (HOA) is most commonly formed to take care of all
the communal areas and to police any of the rules and covenants agreed by the
Home Owners. This makes life far more simple if for example a neighbour is flouting
a 9pm pool closure rule-the HOA deals with it not you personally saves a little
friction and stress? Other rules you may all agree on include hanging out laundry
perhaps banning pets (sorry pets!)or disallowing any commercial activity from the
premises. What we are attempting to illustrate is that they are always common sense
and for the benefit of the community as a whole. Remember you may have a look at
the ‘rules’ before you buy if you wish.

Your proportion of the HOA fees will be stipulated in your title, if for example a
neighbour owns multiple properties they will have multiple charges-one per
property.

In a HOA you still own your property Freehold you then own a share in the rest of
amenities and communal grounds this stretches beyond the pool it can also
comprise of corridors, communal lighting, lifts, underground car parks as you see the
list goes on. You take care of your own home you then collectively set a budget for
the rest you then have to pay your share on a monthly basis. As mentioned before
budget for it but look on it as a positive instead of receiving a high bill for some
unexpected problem everything is budgeted for (even a contingency fund)
We find the communal liability insurance or perhaps Hurricane insurance in some
areas reassuring-litigation in the States could seriously damage your wealth! So as
we continue to labour check all these costs before you buy.

The day-to-day running of the HOA will be by a committee of residents, the great
news is don’t worry in our experience there is so often a former solicitor or
accountant heroic enough to take on the responsibility.

AMAZING RESORTS TOP TIP: SHOP AROUND FOR FOREX-YOU’LL MOST
PROBABLY BE SHOCKED AT HOW UNCOMPETITIVE YOUR BANK IS!

Property tax
Ad Valorem tax, Florida has no income tax however there is a tax levied against
Property, this is normally between 1.5 /2% of the property value. Say for example you
invest in a property valued at $250,000 and you are taxed at 1.75% P/A your bill will
be €364.58 per month.

Exchange rate
For Forex (foreign exchange)& Currency conversion look at the which guide or the
advice of the Times or Telegraph (you’ll see our partners www.moneycorp.com are
highly respected and highly competitive) the difference a few points makes on a
holiday is annoying on a home purchase it’s heartbreaking.

COMPASS AMAZING RESORTSTOP TIP: TAKE PROFESSIONAL LEGAL ADVICE

Legals
Sign the contract-do some checks sign the Deed of title-almost that simple however,
don’t take anything for granted-remember our mantra professional independent
legal advice.

Good news! Not dissimilar from the UK (taking in account the differences in
Scotland) both systems are based on Common Law. As in the English definition of
real and personal property, real property includes land and buildings however never
the shares in a Company that owns land and buildings.

A simple rule for the USA is that the sale of real estate must is always governed by
the individual State that it exists in. In essence they remain fairly similar across the
USA the form of ownership is referred to as in ‘Fee simple’ what we in the UK refer to
as Freehold.

In the case of flats and Condos the piece of Real Property is divided amongst the
units- a condominium is created. The real property is divided into privately owned
parts just like a Freehold flat in the UK. The management of the entire roof and
communal areas in looked after by a management t company usually appointed by
the Developer or Owners (if the developer forms the Management company the
owners –if not happy can (in accordance to nay contracts remover the management
company and find their own, This is a rare occurrence in the US, companies normally
are highly competitive and professional) the checks made by your Lawyer will
include:
• Planning • Zoning • Free of Mortgage and other charges • Survey • Site survey for previous damage • Local searches will have to be requested • Home inspection

 

Purchasing property in Turkey

Turkey has grown dramatically in popularity with holiday home owners and property investors. Factors include Turkey’s accession towards EU membership and the economy has remained remarkably stable considering these tumultuous times. The whole ownership issue becomes more open and accessible to encourage outside investment. We can now see the first wave of holiday home owners moved in, completed on their purchases. The big investors in Turkey have come mostly from the UK and Germany, as Turkey becomes a more-and more important link- East we may well see a further spur in investment.

Unlike many other countries in Europe (where great amounts of land is privately owned) most of the land belongs to the State. One advantage of this is; this greatly simplifies the whole sale and planning for new projects. We have seen vast parcels of land becoming available for development because of the Governments approval of such investment.

The fundamentals governing the purchase of property by foreign nationals (anyone not Turkish) is governed by the 1934 Property Act. The legal framework was further modified in 2003, this was simply to add if your country allows Turkish people to invest in their property, Turkey will reciprocate, these were then replaced in 2005 and a new law bought in on 7th January 2006 with far more detail.

At present all purchases by overseas nationals are subject to approval of the Turkish Military. This simply clarifies that the land is not of military importance and that the purchaser is fit to own land and property in Turkey.

The buying process

Your property investment in Turkey is Freehold, you are free to sell it, rent or leave it to the kids! The Title Deeds is Turkey is known as TAPU. To enter into a contract you will need a copy of your passport details along with a local tax number. The tax number is also required to open a bank account in Turkey. The obligatory passport pictures are another requirement.

As with all property transactions we recommend an independent international lawyer or a local expert; again we are happy to introduce you to an advocate or you can choose your own.

Allow circa £1000 for conveyance costs; add the purchase tax of 3.3% of the value of the property. In addition to these other closing costs are; accommodation tax, electricity and water charges , Notary fees –this should be circa £1000, make sure your lawyer makes the costs transparent. Your property can be paid for via your bank and a currency dealer in the UK, again we can assist.

After your application has been approved by Government and the Military both the vendor, and buyer attend a meeting at the Land Registry office, this can be completed in Turkey or a Power of Attorney can be granted.

Please contact us for further details, this information is for illustration only and is not intended to replace professional independent advice

Back to our Turkey site www.propertyinturkey.co