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Beauties of occupied Cyprus

Taxes and VAT

Transfer Fees

These are payable by the purchaser when the property is registered in their name at the District Land Offices. They are based on the market value of the property on the day of purchase.

The rates applied are;

3.0% on the first €85,000

5.0% on €85,00-€170,000

8.00% over €170,000

*Until the end of 2016, there is discount of 50% in the transer fees, for Resale properties.  New properties are totally exempted from tranfer fees until the end of the year.

 

Immovable Property Tax

The annual immovable property tax is calculated on the market value of the property as at 1st January 1980 and is payable by the owner of the property.

 

Market value of property (€)

Annual Property tax (%)

up to 170,000

exempt

170,001 to 425,000

2.5

425,001 to 850,000

3.5

over 850,000

4.0

 

Capital Gains Tax

Capital Gains Tax is payable upon disposal of a property. The first€17,000 for each person is exempt. The rate payable is 20%. The gains are the difference between the sales proceeds and the original cost of the property.

On top of this allowance, the seller is entitled to a further allowance regarding the transfer fees paid, inflation rate per year and the cost of any additions made to the house.

 

Stamp Duty

The purchaser is liable for the payment of stamp duty at the rate of 1.50 Euros per thousand up to the value of 170.000 Euros and thereafter at the rate of 2.00 Euros per thousand.

For example if the purchase price is Euros 272.500

 

first    € 170 000          1,5‰

€ 255

next   € 102 500           2‰

€ 205 

Total                                              €460

 

 

 

VAT on Cyprus Property

New built property sold in Cyprus may be subject to V.A.T.

Any additional expense to the price of the property can make a considerable difference as its affordability.  Buyers must therefore take special care to confirm whether the property they are considering purchasing is subject to V.A.T. and if so, whether the purchase price quoted includes the V.A.T.

If the buyers will use the property as their main residence and/or this is their first home in Cyprus the V.A.T which will be paid in addition to the sale price will be only 5%.  Otherwise the property is subject to 19% V.A.T.  When the property is subject to VAT there will be no transfer fees payable to the Department of Land and Surveys by the purchaser.

 

What Property is subject to V.A.T?

 

New built residences?

Where the planning permit for property was issued following the 1st of May 2004 then the sale will be subject to V.A.T. at the current rate of 19%.  Conversely for the sale of property whereby the relevant planning permit was issued prior to the 1st of May 2004 no V.AT. is payable.

*Until the end of the current calendar year properties that carry VAT are totally excempted from tranfer fees.

 

Land

Sales of land are exempt from V.A.T. although it is anticipated that this will be changed at some stage in the future.

 

Used property – Resales  

Sales of used property (i.e. resales) will not attract VAT.

 

In the case where VAT is chargeable, there is special provision for a refund in the case of first time buyers and legal advice should be sought as to whether this provision is applicable and an application can be made.

 

In the case of a purchaser’s first private residence then a refund of maximum 10% of the VAT paid on the property may be claimed back from the local authority.  It should be noted that the full amount needs to be paid first and then the refund is applied for at a later stage, however the process effectively allows for a lower rate of 5% to apply to this category of buyers.

 

The actual value of the refund is made according to a calculation which takes into account the area of the property, the type of property and the cost of build per square meter.

 

The refund does not apply to ‘‘luxury properties’’, these are properties which have a covered area of more than 250m2

 

Qualifying for a V.A.T. refund

 

In order to qualify for a V.A.T. refund the following criteria must be satisfied:

The property must be the main residence of the applicant, who should not own another second residence on the island;

The applicant must be 18 years or older and must be an EU Citizen;

The applicant must be permanently resident in Cyprus(i.e. reside in Cyprus for no less than 186 days per year). A utility bill should be presented with the application in order to prove this.

It should also be noted that the property must be the residence for at least ten years (if it is not then you will be liable to refund the payment proportionally according to the amount of time spent in the property );

Contract of Sale;

Utility bills proving permanent residency;

Building permit.

 

Re-selling the Property

V.A.T. is only payable once upon purchase.  No further V.A.T. is charged on resells.

Special consideration should be given to resale properties, which are sold under a cancellation and resale agreement, before the original purchaser had the opportunity to use the property.  In such cases, the purchase will attract V.A.T and the developer will be liable to account for such.  In the event that the property has been used then it will be considered to be a resale and V.A.T. will not be due.

 

The above should be used as a source of general information only.

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