how can you buy home in egypt ? every thing you need to know

TRANSACTION COSTS Who Pays? Registration Fee 2,000 (US$280) buyer Legal Fees 3% buyer Real Estate Agent´s Fee 2.75% - 3.30% seller Transfer Tax 2.50% seller Capital Gains Tax 2.50% seller Costs paid by buyer 3.10% Costs paid by seller 7.75% - 8% ROUNDTRIP TRANSACTION COSTS 10.85% - 11.10% See Footnotes Source: Global Property Guide ..................................................................................................................... How difficult is the property purchase process in Egypt? Foreigners can buy property in Egypt, under Law No 230 of 1996. Foreigners cannot buy more than two pieces of real-estate, which cannot exceed 4,000 square meters (sq. m.), and their purpose must be for a family member to live in the property. The purchase must have the approval of the Council of Ministers, which takes around two months. Registering property in Egypt Egypt houses and villas for saleIf registered, the property cannot be sold or rented for five years. The purchase sum must be brought into Egypt in foreign exchange, through one of the public commercial banks (though this provision of the law is not enforced). Finally, the property must be rented furnished after the 5 years period, which has tax disadvantages (see tax section). If the foreigner is married to a local, the obvious solution is to get his/her spouse to buy the property and then let the property unfurnished, as locals do, usually avoiding tax. Recently Egypt capped the total payable under the 3% registration fee rule at EGP2,000 (US$280), regardless of the purchase price of the property. So registration is now less expensive than it used to be. But the process still takes a long time. ‘SIGNATURE VALIDITY COURT VERDICT’ OWNERSHIP Property in Sharm El Sheikh cannot be registered Property in Sharm El Sheikh follows a different regime, because an administrative decree issued in 2005 abrogated the 1996 law for property in Sharm el Sheikh. Under the decree, foreign purchasers in Sharm el Sheikh cannot acquire freehold rights, but only 50year leases. Foreign purchasers must therefore follow a procedure called a ‘signature validity court verdict’, The ‘signature validity court verdict’ method could well become the dominant route for foreigners even outside Sharm, because it allows the foreigner to buy as many properties as he likes, rent them, and sell when he likes. The following steps must be taken: A ‘negative’ certificate for the property should be obtained from the government, stating that there are no mortgages, pledges, or any other sort of rights on the property registered to any other party. The tax authorities must issue a certificate stating what taxes are due on the property. A sale / usufruct contract should be drawn up. The validity of the sale depends on the terms of the contract. So it is essential for the purchaser to have a detailed contract, defining the property boundaries, the purchase price, the method of the acquisition of the rights of the previous owner, and the method of payment. The contract must be in Arabic, since Arabic is the only language recognized by the courts. Purchasers must issue a power of attorney to their lawyer so that he can act on their behalf, a procedure which, oddly enough, first requires the purchaser to obtain a multi-entry visa. Then the lawyer files a legal suit to obtain a court verdict certifying that the signature on the sale / usufruct contract truly belongs to the seller (This is the ´signature validity court verdict´). This suit will take between 6-8 months. The two methods, registration and the ‘signature validity court verdict’ each have their own advantages and disadvantages: The advantages of registration: Full and maximum protection. It is the recognized method in the Egyptian law for transferring real estate ownership. Disadvantages: You are not entitled to resell your property unless 5 years have passed since the date of purchase, and even then you would need to obtain a written approval from the Prime Minister. WHICH OWNERSHIP ROUTE IS BEST? The advantages of the ‘signature validity court verdict’ method: This is the practical way for real estate transactions either in Sharm el Sheikh, Hurghada, or Marsa Alam or elsewhere. This method allows you to resell your property whenever you need, and without need for any approvals. Disadvantages: Egypt oceanview propertiesIt is a weaker form of protection than registration. A real estate lawyer’s services are much needed when buying property anywhere in Egypt. One reason is that people have in the past been reluctant to register properties, because it was costly to be the first owner of a building to register. Even in a modern area like Maadi, sometimes sellers have not registered because they still have an outstanding debt secured by the building, and fear that upon registration the creditor would be able to claim the building.