Costs

Several fees and taxes are payable when buying property in Cyprus. These generally amount to between 6 and 7 per cent of the purchase price and include:

1. Transfer fees on the purchase of a new or resale property. Don’t forget about this, it is often forgotten. You will be liable to pay the following transfer fees, calculated according to the property’s market value at the time of the signing of the contracts. In practice, it may be several years before the transfer fees are due.

• 3% on the first CYP 50,000
• 5% on CYP 50,000 to CYP 100,000
• 8% on greater amounts

Example 1:

On the transfer of a property at the Land Registry Office, which was purchased for CYP 110,000 a purchaser will pay CYP 4,800 in transfer fees:

Example 2:

If the property is bought and registered in the names of two individuals (i.e. husband and wife), then the market value of the property is divided in two parts resulting in reduced transfer fees.

On the transfer of a property at the Land Registry Office, which as purchased for CYP 110,000, and will be transferred in the name of two individuals, the purchasers will pay CYP 3,500 in transfer fees:

2. Stamp duty at 0.15 per cent of the purchase price up to the value of CYP 100,000, and thereafter at 0.20 per cent for every additional CYP1,000

3. VAT (at 15 per cent) on new build properties only.

4. The fee for the application to the Council of Ministers CYP 150

5. Legal fees – Always ask for a fixed price and compare the costs of at least two solicitors. Price should not be the deciding issue, but where you feel equally comfortable about both, it is better to judge on price. Solicitors will charge 1% of the sale value if you let them.

6. Surveyor’s fee (optional)

7. Mortgage fees (if applicable). The registration fee of a mortgage is one 1 per cent (1%) of the amount secured, plus the relevant stamps

8. Immovable Property Tax

The registered owner of a property is liable to an annual immovable property tax calculated on the market value of the property as on 1st of January, 1980.

The registered owner of immovable property is also subject to minor taxation under other laws, such as municipal or village regulations. These taxes are calculated according to the area and the size of the property and cover sewerage, refuse collection, street lights. The charges go up to about CYP 100 per annum.

9. Communal Expenses

Communal expenses are usually payable monthly or quarterly, in advance, and vary from development to development depending on the area and type of the property. They cover an immovable property’s owner share of the cost of cleaning and maintaining common areas and gardens, communal swimming pool expenses, electricity in common areas, management fees and repairs.

Selling a property - Capital Gains Tax

Capital Gains Tax is levied at the rate of 20% of gains arising from the disposal of immovable property or the disposal of shares of companies the assets of which consist mainly on immobile property.

As a general rule, the gain is calculated as a difference between the sales proceeds and the original cost of the property. Interest on payments paid for the acquisition, additions to the property and inflation rate, as published yearly by the Government, are deductible.

Capital Gains Tax as a whole has minimal effect, since the appreciation of values, coupled with the following allowances and inflation, tend to leave little excess.

Individuals are entitled to the following lifetime allowances on Capital Gains Tax:

• The first CYP 10,000 of gains arising from the disposal of any property is exempted.
• The first CYP 15,000 of gains arising from the disposal of agricultural land by the farmer is exempted (subject to certain conditions
• The first CYP 50,000 of gains arising from the disposal of a house used by the owner for his/her own habitation are exempted (subject to certain conditions).

The above allowances are not available separately and an individual claiming a combination of the above allowances is only allowed a maximum lifetime allowance of CYP 50,000.

Cyprus residents and companies registered in Cyprus are subject to Capital Gains Tax when disposing their property, wherever it is, in Cyprus or overseas. However, under certain conditions, Capital Gains Tax be reduced significantly if the purchase of the immovable property is effected through a Cyprus registered company.

Non-residents are only taxed when selling property situated in Cyprus but they can be completely exempt from Capital Gains Tax if they can prove that the purchase consideration was paid with foreign funds imported between 1 August 1980 and 13 July 1990.

The following categories of immovable property disposals are exempted from the Capital Gains Tax:

1. Transfers by reason of death
2. Gifts between relatives up to third degree of kindred
3. Gifts to limited liability companies when, at the time of transfer and for a period of five years following the transfer, all the shareholders of the company are members of the family of the donor
4. Gifts by family companies to their members, but only in cases where the property transferred, was obtained by the company as a gift
5. Exchanges of immovable properties
6. Compulsory acquisitions
7. Gifts to charitable institutions
8. Gifts to charitable institutions or the Republic of Cyprus

Estate Duty
Estate Duty was abolished as from 1st of January 2000.