Property Taxation In Cyprus
Recent changes to Cyprus property taxes will benefit both those who have purchased property in Cyprus and those planning to purchase. Below you will find an updated Cyprus property taxation guide, from 2017 and onwards. Immovable Property Tax has been abolished as of the 1st of January 2017.
Until the end of 2016, the registered owner of the Cyprus property, was liable to an annual Immovable Cyprus Property Ownership tax calculated on the market value of the property as at 1st of January 1980 (paid by the 30th of September in the year). Immovable Cyprus Property Tax was payable to the Inland Revenue Department of the Republic of Cyprus.
Value of Property Rate
Up to €40,000 is 0.60%
€40,001 — €120,000 is 0.80%
€120,001 — €170,000 is 0.90%
€170,001 — €300,000 is 1.10%
€300,001 — €500,000 is 1.30%
€500,001 — €800,000 is 1.50%
€800,001 — €3,000,000 is 1.70%
Over €3,000,001 is 1.90% (with minimum tax €75)
A one-off stamp duty is levied on the purchase of property in Cyprus. The rates are dependent on the contractual purchase amounts and payment is due within 30 days of signing the Sale Agreement. The amount is payable by the purchaser to the tax authorities. Purchase Price in € Stamp Duty in %
Up to 5,000 is 0%
5,001–170,000 is 0.15%
Over 170,000 is 0.20% (Note: Maximum Duty €20,000)
The purchaser will be liable to pay the following transfer fees for the Cyprus property acquired, when this is registered in his/her name at the Land Registry Office. The fees are charged on the property’s market value at the date of purchase.
Property Value in € % Up to 85,000 is 3%
85,001–170,000 is 5%
Over 170,000 is 8% (The rates above apply per person)
Important Note: The Cyprus Parliament announced the abolishment or reduction of Cyprus property transfer fees, this offer applies until the end of 2016 and the following will apply:
1) Exemption from transfer fees if the transfer relates to a transaction that is subject to VAT. VAT is charged at the standard rate of 19% where a reduced rate of VAT (5%) has been introduced for Cyprus properties purchased by permanent residents of Cyprus, provided that the Cyprus property will be used as the main residence of the purchaser for a minimum of 10 years.
2) In case a transaction is not subject to VAT, the legislation provides for an exemption of 50% of the transfer fees. This applies to transactions where transfer fees apply or are due and the transfer relates to plots of land, buildings or interests in land or indivisible interests that are sold for the ﬁrst time from the date of issue of the relevant building permit and the relevant contract is prepared and submitted for the ﬁrst time to the local District Land Registry during the period of application of the law.
Capital Gains Tax
Capital Gains Tax is levied at 20% on gains arising from the disposal of property by each individual person. The gain is reduced by an indexation allowance that takes into account the inflationary increase over the years the property was owned. Non-residents are only taxed when selling property in Cyprus.
***The following allowances are available to individuals:***The first €17,086 of gains arising from the first disposal of any property in Cyprus. The first €85,430 of gains arising from the disposal of a house used by the owner for his/her own habitation. This allowance can only be claimed once. An individual claiming a combination of the above allowances in only allowed a maximum allowance of €85,430.
Inheritance Tax has been abolished with effect 1 January 2000, and is no longer imposed.
Local Authority Tax
Cyprus property taxes levied by the local authorities are payable annually and may vary, depending on the size of the property. The tax covers the cost of garbage disposal, street lighting, etc.
Communal expenses cover an owner’s share towards the cost of cleaning and maintaining a project’s communal areas, gardens, swimming pool, management fees and repairs. These are payable at fixed intervals throughout the year and vary from development to development and from property to property.
Local Authority Fees
Depending on the size of your Cyprus property, local authorities charge between €85 — €500 per annum for regular refuse collection, street lighting, sewerage and similar community services. Communal Services fees are payable to your local municipal authority.
As the registered owner of the Cyprus property, you are required to pay an annual Municipality Tax, calculated on the market value of the property as at 1st of January 1980. Rates vary from 1‰ — 2‰. Municipality tax is payable to your local municipal authority.
As the registered owner of the property in Cyprus, you are required to pay an annual Sewerage Tax, calculated on the market value of the Cyprus property as at 1st of January 1980. Rates vary from 3‰ — 7‰. Sewerage taxes are payable annually to your local sewerage board.
Buying Cyprus property as an investment
Local Cyprus property values have shown a steady upward movement over the years and properties, especially beach front properties, have shown a considerable appreciation. Relative to equivalent property found in other Mediterranean and Southern European countries, local Cyprus property is believed to offer good value for money and the island’s increasing popularity by the international market further supports this.
The legal system in Cyprus is largely based on the British equivalent and safeguards the purchaser’s rights in many ways.
For the purchaser’s protection, once the agreement of property sale has been signed and a deposit paid, the Land Registry in Cyprus provides a simple and effective legal instrument called the “Specific Performance”. This procedure protects the purchaser’s ownership rights until the title deeds are issued and transferred to their name.
The contract in the hands of the Land Registry cannot be withdrawn by anyone; and therefore the property cannot be leased, sold, transferred or mortgaged. This status can only be altered by the purchaser himself.