Assetz® News - Top tips for Cyprus

Top tips for Cyprus

1st July 2008 |

On the face of it, Cyprus may seem a great place for Britons to invest, with its colonial and Commonwealth connections, right hand drive, a widespread use of English, a large ex-pat population and many common customs and documentation.

The country also offers plenty in the way of variety that might usually be found in larger countries, rather than a small Mediterranean island. While France and Spain can offer both sunshine coasts and high mountains with skiing, it may surprise some that Cyprus can too, although the winter offerings of the island's Mount Olympus may not quite be enough to attract either a rush of property dealers or the Winter Olympics - however appropriate the name - anytime soon.

But investors in Cyprus, not least first-time investors, do need to make sure they are covering all the legal issues and potential pitfalls. Simon Cozzolino, a consultant at overseas property developer Pafalia, advised there are good ways in which an investor can in the first instance save on costs.

He advised: "Use a Cyprus lawyer because it will halve your costs and don't buy through an agent because you will end up paying about five per cent more."

Set-up costs are one issue. For all investors, of course, there is the issue of making sure they buy in the right location - partly because they may want to spend some time themselves in an attractive property in a nice spot, but also because such a place can also attract tenants for holiday rents and have a good prospect of increasing in value. At the same time, the quality of the property needs to be high.

Mr Cozzolino suggested those who know other buyers can tap into their knowledge, saying: "Buy directly through a trusted developer and preferably one that your friends have brought through who can show you something that they've built already."

As for location, Mr Cozzolino suggested that proximity to a few people wandering around green expanses whacking a small white ball about was a good idea: ""Buy near a golf course if you want to get rental income. Don't buy in the middle of nowhere; buy in an already developed area to keep the risk low."

But while all these elements of investing may be essential for a successful venture into Cypriot property, there are also longer-term concerns. One that applies to all countries is to make sure any investment does not fall foul of the vicissitudes of the inheritance tax (IHT) law, IHT specialists the Way group told Finance Daily.

Spokesman Paul Wilcox warned that those moving and investing overseas would need to put together an IHT migration plan, a device that will be set up to ensure as little extra tax is incurred as possible. Without one of these, he said, the consequences could be "financially disastrous".

Mr Wilcox added: "Its vital to be aware that wherever you go and whatever tax regime you may be affected by in your new country of residence, you may still incur IHT within the UK as well, possibly on the same assets."

So for those investing in Cyprus, or anywhere else for that matter, the lessons remain the same: take the best advice available, be it for where to buy, how to deal with legal issues or how best to handle tax rules. As ever, it pays to carry out research and get the best advice and help available.