The mix of sun and sand has always made Cyprus a popular destination for tourists, the attraction of obtaining EU Citizenship have also made the Mediterranean island popular with investors from Russia, the Middle East and Asia.
Demand and market activity has caused local property values to show a steady and at times sharp appreciation, but this trend has slowed in recent years due to the global economic slowdown. This is great news for the investor. Great properties are abundant, and local property prices are still much lower than those of other European countries such as France, Portugal and Spain.
Cyprus – Great Legal Protection
The legal system in Cyprus is based largely on the British Common Law system. Unlike some other European nations, there are extensive safeguards within that law that guarantee the rights of those purchasing houses and land.
A standard part of all property contracts in Cyprus is a document known as the “Specific Performance”. Once you have agreed to purchase a property, the Land Registry of the Cypriot Government releases this document, that acts as a legal record of your purchase until the title deeds are issued and transferred to your name.
This document stays on file at the Land Registry. It cannot be revoked and prevents anyone other than the purchaser from leasing, selling, transferring and mortgaging the property. Any changes need to be made by the purchaser or his agents.
Stamp Duty in Cyprus
In common with most other jurisdictions, buying a property in Cyprus is subject to a local tax known as Stamp Duty. This tax is payable by the purchaser directly to the local tax collection agency. The tax at 0.15% of the purchase price on properties up to €170,000 and the at 0.2% on the purchase price above that level.
The fee is capped at €20,000.
Property Transfer Fees in Cyprus
Property transfer fees are one of the few areas of complexity in the Cyprus property buying process. The table below lists the basic rate of tax:
|€85,000 to €170,000||5%|
However, make sure to check the VAT status of the property with your agent. Properties subject to VAT are exempt from the charges above. Properties that are not subject to VAT may be eligible for a 50% exemption.
Cyprus Immovable Property Tax
All property owners, regardless of whether they’re resident in Cyprus or not, are liable to pay an annual tax based on the total value of all the immovable property registered in their name. The tax is calculated on the value (or estimated value in the case of new property) on the 1st January 1980.
This fee is paid annually to the Inland Revenue Department.
The tax bands are cumulative (i.e. you pay in each band as you cross the threshold) The current rates are shown in the table below
|Assessed 1980 Property Value||Annual Property Tax Rate|
|€1 to €12,500||Nil|
|€12,501 to €40,000||0.6%|
|€40,001 to €120,000||0.8%|
|€120,001 to €170,000||0.9%|
|€170,001 to €300,000||1.1%|
|€300,001 to €500,000||1.3%|
|€500,001 to €800,000||1.5%|
|€800,001 to €3,000,000||1.7%|
|More than €3,000,000||1.9%|
Capital Gains Tax in Cyprus
Cyprus Capital Gains Tax is levied at 20%. A discount on the gain is also available. The reduction from the discount is based on the rate of inflation over the time you have held the property. Non-residents will only be taxed when selling property.
The first €17,086 of gain on any sale is not counted for tax purposes. If you are selling your personal home, you do not pay on the first €85,430 of your gain.
Inheritance Tax in Cyprus
There is no inheritance tax on Cyprus
Local Authority Tax and Other Charges
A local property tax is levied by the local authority. This is used to pay for services such as garbage disposal and street lighting.
If you are in a development with some shared facilities, you will pay toward communal expenses such as garden and swimming pool maintenance, as well as a general fund for upkeep and repairs to communal areas.