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By Michael Doherty
Retiring to another country is a big step. Buying a house for your retirement there is an even bigger one. But big steps don’t have to be bad steps if you tread carefully. The old advice to ‘look before you leap’ should be your guide.
Anyone who is planning to buy a home for retirement in Cyprus should take advice – on your move, on your pension and on the property. And take it from people you can trust.
Expats have an obvious advantage in that they already know the pros and cons of the country and are familiar with its cost of living and some of its legal loopholes. Even so, buying a home is always a big step and British expats still need to plan with care if they are buying for the first time.
Cyprus has shaken off its financial woes and is riding a new wave of prosperity, most visible in the property market, which has spawned a remarkable number of new residential projects.
A big draw for non-nationals is Cyprus’s beneficial tax system. The first €19,500 of earned annual income is tax-free, and pensions above €3,450 are taxed at five percent.
Another attraction is the so-called “golden visa”. In return for a property purchase of €300,000, buyers can get residence. For €2 million, and an obligation not to sell for three years, non-EU citizens qualify for an EU passport. For the moment, this last clause is not relevant to UK citizens but, with the terms of a Brexit deal looking as uncertain as ever, it might well be an attraction in the near future.
Problems and delays with title deeds in Cyprus are well documented, so it’s advisable to get solid legal advice before committing to a purchase.
A reliable lawyer, proficient in your language and independent of the other parties to the transaction, is the most important consideration. While lawyers are not required to conduct due diligence automatically, such as a mortgage check, a good lawyer should do this as a matter of course.
Purchasers are advised not to rely on developers to conduct due diligence even if they provide official extracts from the Land Registry and other government departments.
It is important to calculate the value-added tax, transfer fees, stamp duty, legal fees, disbursements and immovable property taxes that will be applicable for real estate purchases as early as possible in order to budget accordingly.
VAT is often misunderstood and sometimes misrepresented by developers and advisers in Cyprus. Property purchasers who have made uniformed VAT elections often find themselves either unable to manage their properties as they wish or facing significant VAT liabilities.
The good news for home buyers is that there is no inheritance tax in Cyprus and retirees only pay five percent tax on their foreign pension. But be warned: retaining a property in Britain can leave you subject to UK tax, so if you make the move it may pay to burn your bridges.
Like the house-buying process itself, good advice is vital for those planning to live abroad on a pension. Woodbrook Group can help you understand your options, how to address your income needs in retirement and how much wealth you will need to support it
Woodbrook Group is an international firm of financial advisers. Unlike many financial advisory companies, it is not owned by any financial institution or life insurance group, and so can offer you unbiased and impartial advice.
It offers other services for those seeking to retire abroad. Its experienced consultants can help you balance your savings and investments, by setting up a strategic plan which meets your specific needs in liquidity, risk attitude and return rate expectation. They will keep you informed about specific new opportunities for investment that may be of particular interest to you.
So, while retirement abroad will always be big step, with the right advice it can be a very rewarding one.
Michael Doherty is CEO of the Woodbrook Group
*For more information, contact our team at the Woodbrook Group Office in Limassol: Berengaria 25, 25 Spyrou Araouzou, 6th Floor, 3036 Limassol, Cyprus.
Telephone: +357 25272820
Website: www.woodbrookgroup.com
Email: [email protected]
