Fees and Taxes on Cyprus Property

1. Transfer fees: one-off payment.

The purchaser will be liable to pay the following transfer fees for the property acquired, when this is registered in his name at the Lands’ Office. The fees are charged on the property’s market value at the date of purchase:

The director of the Lands Office may dispute the declared value and adopt a Market Value of the property. The adopted valuation date is the date of purchase provided the sales contract is deposited at the Lands Office. If not, the actual transfer date will be adopted as the valuation date, unless proof of the purchase date is provided.

If the property is placed in joint names, e.g. the name of a couple (husband & wife) or two individuals, then the purchase value is split into two parts which results in reduced transfer fees. For example:

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

3. Fees for the deposit of a sales contract in the Land registry: The deposit of the sales contract is advisable in order for the purchaser to exercise the defence of Specific performance against the developer/seller and benefit from the property tax exemptions. The purchaser has the right to deposit the sales contract within 6 months after signing of the contract. However the sales contract must be stamped within 30 days after signing. After this period a small penalty is imposed. The contract stamp fees are:

4. Income Tax and Capital gains tax: Dealers in land are treated under the income tax laws whereas non dealers under the Capital Gains Tax ones. Capital Gains Tax is levied at the rate of 20% on gains arising from the disposal of immovable property or the disposal of shares of companies the assets of which consist mainly of immovable property. The cost of acquisition and sale includes interest of payments paid for the acquisition. Additions to the property etc., are also deductible from gains. On the acquisition cost, the inflation rate (as this is published by the Government) is added on. Thus the tax is charged on gains which takes into account the inflation  The Gains, Tax as a whole, has minimal effects since the acquisition cost coupled with the various allowances and inflation leaves little for taxation.

Allowances for Capital Gains Tax

Capital gains tax is payable by both residents and non-residents at a rate of 20% on the gains made from the disposal / sale of immovable property in Cyprus in relation to the cost acquisition. If the property was acquired prior to 1.1.1980 the property’s value is adopted as at 1.1.1980 and this value is so recorded on the title deed. If after 1.1.1980 the actual cost of acquisition is adopted. In both cases the acquisition cost is upgraded/inflated, based on the cost of living index, so published on a monthly basis by the Cyprus Government. So, if a property is acquired at a cost of say €170.000 2 years ago and the index is, say, now +7%, the indexed cost [the cost which will be taken into account by the tax authorities is €170.000 x 107%] = €182.000.

There are several allowances to the tax which is worth mentioning.

1. If the property is the sellers’ primary residence, with land extent up to 1.500 sq.mts., there is a lifetime [i.e. once only] exception of €85.430. If it is in the names of both spouses then again the sum of €85.430 [i.e. €42.715 each] is in total. This is so, provided that one lives in the residence for the past five years prior to sale and there are no other previous claims [for the €17.000 mentioned below in paragraph 3]. If a previous allowance has been made, this previous allowance is deducted from the €85.430 allowance. This allowance of €85.430 holds good provided one claims it, within 12 months after the house is sold or within 12 months from not living in the residence.

2. If one has a house which was sold and has claimed the exception, which did not warrant the full allowance of €85.430 then the balance can be claimed from the new permanent residence, purchased. He can claim the difference provided he lives in the new residence for a period of 10 years, prior to the sale. It is repeated here that the €85.430 is for life in total of any number of residences.

3. For any other kind of property (e.g. a holiday home, plots, land), only €17.000 is exempt, and this exemption is for each registered owner, [once only] not per property, so if a gain is made by two co-owners each one is allowed the €17.000 exception. For agricultural land sold by a bona fide farmer, the exception increases to €25..630. [One cannot claim both [1] and [3] of these exceptions. The total amount that can be claimed for both allowances must amount to €85.430 maximum.

4. Exchange of property. Capital gains tax is paid on the difference between the value of the property given and the value of the property obtained. 

So, if for example, one exchanges a €500.000 property with another property of €300.000, then the capital gains tax is applied on the difference of €200.000. If the exchange is equal in value, then no Capital Gains Tax is paid.