Cyprus Property Law

Cyprus Real Estate Laws Differ For Overseas Property Owners

Overseas property buyers purchasing Cypriot property may be unaware of the legal position regarding their assets if the die in Cyprus.

Lawyers specialising in expat Legal & Tax advice has clarified the position that may surprise many expats with homes in Cyprus.

Cypriot law differs with UK and other European laws when it comes to dealing with a persons Will. The fact is that if you die without a Will your estate passes automatically to your children – not your spouse. Also, it could be expensive because of unavoidable taxes and fees.

The very wealthy are able to make trusts and foundations to hold overseas assets and control ownerships when people die, these same rules are available to everyone and using them can avoid expensive and lengthy probate costs.

Cyprus lawyers can charge, by law, a fixed amount for Probate work, typically in excess of 12% of the estate value. That is a whopping 12,000 euros for every 100,000 euros of worldwide property and investment assets, a very expensive exercise which could be avoided by planning ahead.

If you die without a Will with Cyprus assets, the courts will appoint a solicitor who will charge the full Probate cost. Another concern arises if you do not have a Will and the children inherit, the children could simply sign affidavits to “give up” their rights to inherit in favour of the spouse, this only adds additional expense and delay to death intestate. But, the children could refuse to hand over the assets to the spouse and there is nothing can be done to force them.

Solutions

There is no UK or Cyprus Inheritance Tax on first death between UK domiciled married couples. They can transfer twice the Nil Rate Band on second death £624,000 without Inheritance Tax but Cyprus real estate property and land, motor vehicles and business still need probate. Using family members can avoid “fixed” solicitor’s costs.

Sometimes separate Wills for separate jurisdictions can settle assets in different countries, reducing Inheritance Tax and delays in Probate – currently two years plus in Cyprus.

TRUST

One can also look at a “Trust” which is in effect a “living Will” where you give your personal assets to a new legal entity called a Trust. Subject to tax rules you can continue to have an element of direct and control these assets and have a Trust Will to provide for the distribution of assets on death.