Taxes when Buying,Selling or Owning a Property in Cyprus
When buying, owning, or selling a property in Cyprus, you should be aware of the applicable Cyprus property taxes.
Cyprus property taxes when purchasing a home
1. Stamp duty
When purchasing property in Cyprus, the buyer is usually responsible for paying the stamp duties that must be applied to the purchase agreement and related documents. These are paid to the Internal Revenue Service (i.e. the Cyprus Tax Department). Stamp duties are typically paid in the following ways:
Purchase agreements. Stamp duties are calculated on the purchase stated in the contracts for contracts of purchase of a property in Cyprus on the following scale:
The first €5000 are free and stamp duty exempt; stamp duties on amounts between €5001 and €170000 are 0.15%; and amounts above €170000 are calculated at 0.2% (each extra certified copy of a contract is charged €2).
Legal authority: The majority of property buyers (and sellers) give their lawyers a power of attorney to allow them to be abroad at any time during the transaction and to avoid multiple visits to the authorities to sign the necessary forms. A Power of Attorney must also be stamped. The stamp duty on a general power of attorney is €6, and the stamp duty on a specific power of attorney (also known as a limited or special power of attorney) is €2.
2. Transfer Fees
A property purchase in Cyprus is completed when the buyer's title deed is registered. The Land Registry will estimate the market value of the property being purchased on the day of title registration and charge the buyer Transfer Fees as follows:
The above rates are currently discounted by 50%, and transfer fees are not charged if VAT has been paid. On new properties, VAT is usually payable. If there are multiple buyers, the purchase price is divided by the number of buyers, and the transfer fees are calculated separately for each buyer. Each buyer will then receive a 50% discount on the transfer fees.
A transfer fee calculator can be used from the government official website : https://portal.dls.moi.gov.cy/en-us/Pages/CalculateTransferFees.aspx
The total amount of tax depends on the value of the acquired property. The Transfer Fee is calculated as follows:
- Up to €85 000 of the property value - 3%
- From €85 001 to €170 000 of the property value - 5%
- From €170 001 of the property value - 8%.
NOTE : The fees above are the normal fees however the governement is offering 50% discount at the moment on all transfer fees
An example:
The purchaser bought a house for €300 000.
€85 000 x 3% + €85 000 x 5% + €130 000 x 8% = €17 200 transfer fees ( 50% discount ) = 8.600 euros final transfer fees
3. VAT (Value Added Tax) (V.A.T)
Only the purchase price of new properties is subject to VAT at the rate of 19%. This may be reduced to 5% if the property is to be used as the applicant's primary and permanent residence under the following conditions:
Submission of an application with all necessary supporting documentation; The property must be used as the applicant's primary and permanent place of residence; and The applicant does not own any other property in the Republic of Cyprus that is used as the applicant's primary residence.
The reduced rate of 5% applies only to the first 200m2, and any area beyond that bears the standard VAT rate of 19%.
4. Other costs
Other minor expenses when purchasing a home include the cost of lodging a purchase contract or an assignment, as well as other due diligence costs. These are some of the typical land registry fees that must be paid for the filing of documents.
The filing of a power of attorney or a contract of sale costs €50.
If the property is a resale and new title deeds have not yet been issued, the assignment contract fee is 0.5% of the purchase price, up to €3.000.
Property taxes for Cyprus property owners
1. Tax on Immovable Property (I.P.T.)
This property tax in Cyprus was payable to the Inland Revenue by property owners until the end of 2016. This tax has been repealed since 2017. Anyone who owned property in Cyprus prior to 2017 is still required to pay the tax. I.P.T. is calculated using the property's market value on January 1, 1980. These are per owner rather than per property.
2. Local Government: Taxes and Rates
Cyprus properties will fall under the jurisdiction of either a Municipality or a Village Council. Property taxes and rates in Cyprus vary depending on the municipality/council in which the property is located. Municipality / village council taxes in Cyprus range between €90 and €300 per year, depending on the size of the property. These typically include sewage, garbage collection, street lighting, and other local costs. Electricity and water rates are based on usage, which is typically based on meter readings. The Electricity Authority of Cyprus (E.A.C.) issues all electricity bills, while the Municipality or Village Council usually issues water bills.
3. Communal Costs
These are the costs for properties that are part of a unified complex with common areas. They are typically managed either directly by the residents (via the complex's Management Committee) or through property management companies that specialize in complex maintenance. The cost of communal expenses varies greatly depending on location, property size, and the management company.
4. insurance
Property owners typically insure their properties. Owners of properties in a building complex or project should first check with the project's Communal Management Committee to see what kind of insurance they have and what it covers. The cost of insurance varies depending on the size and condition of the property, as well as the insurance company chosen.
5. Inheritance Tax
You do not need to be concerned about how your property will be taxed after your death. In Cyprus, inheritance tax has been abolished since January 1, 2000.
Cyprus property taxes for property sellers
1. Tax on Capital Gains (CGT)
The capital gains tax of 20% is levied on the profit made on the sale of a property. There is a lifetime exemption for the first €17,086 in gains for each seller, until this allowance is depleted. Certain costs, in addition to the cost of acquiring the property (the purchase price), are deducted from the sale price to determine the taxable profit. These expenses include transfer fees paid when transferring the property on the seller's name, as well as costs for property improvement (such as structural changes, installing central heating, and the fees of a duly registered (in Cyprus) real estate agent).
2. Expenses incurred in providing necessary documents to the buyer
Typically, a seller of real estate must provide the buyer with the following:
Land Registry Search (for Mortgages or other Fees): €10 to €50
Copies of architectural and site plans, as well as previous contracts, are available from Land Registry for €5 to €40.
The cost of registering a general power of attorney is €50.
The aforementioned energy certificate.
3. Debt, utility, and tax payments
When selling a home, any outstanding debts, utilities, and taxes must be paid. For example, a debt secured by a mortgage on the property, amounts owed to the property's developer, any balance owed to the management committee for communal expenses, amounts owed to the authorities for water, electricity, refuse collection, and so on.
4. Fees for Professional Services
The fees of an estate agent and a lawyer are typical. The current fee for registered and regulated real estate agents is 5% plus VAT. Legal fees for property transactions are typically agreed upon between the seller and the lawyer and are fixed AT 1% + VAT. Furthermore, the law requires sellers to provide the buyer with an energy certificate for the property being sold. This costs between €300 and €500.
5. A 0.4% sales tax to fund housing for Cypriot refugees
The Cypriot government announced in November 2022 the imposition of a 0.4% tax on the sale of Cyprus properties, payable by the seller, to support housing for Cypriot refugees displaced by the Turkish invasion. The 0.4% tax applies to both direct sales of property in Cyprus and the sale of shares in companies that own (directly or indirectly) property in Cyprus.
The Cyprus Tax Authority has announced that this tax will take effect retroactively from the 22nd of February 2021, but due to obvious enforcement issues, has stated that it will issue guidance at a later point for tax payments for transactions completed since then and until the 18th of November 2022. New forms have been published for transactions that will be completed after November 18th, 2022.
We help people who want to buy or sell property in Cyprus to do so safely, quickly, and without stress. We provide upfront clarity on expenses, taxes, and all other costs so that you can plan your next steps accordingly.
Please contact us for a no-obligation consultation.
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*Disclaimer : Cyprus Investments has issued this article as an informative guide and educational purposes only. Taxes are subject to change and professional advice should always be seeked when conducting business, property purchase or any tax purposes.