Which property taxes are due on Cyprus new build property in 2017?

Contact Form Title Contact us about property tax in Cyprus
Right Side Link Title Cyprus

There have been changes to property tax in Cyprus since the beginning of 2017 and further adjustments are also expected. So, if you’re considering investing in a sleek new development property in Cyprus, Winkworth International recommends seeking professional tax advice. In the meantime, here are some guidelines on the property taxes to be paid on your Cyprus new-build property purchase.

Property Transfer Fees

Property Transfer Fees are calculated according to the market value of your property on the day you purchased it. These are payable to your local district lands office as soon as ownership of a Cyprus property is transferred to your name. Once you’ve paid the fees, you will receive that all-important Title Deed for the property, which proves you are the property's registered owner by law. When you go to pay your property transfer fee, remember that a cash payment is preferred as this takes less time to process.

VAT

The amount of VAT payable on a Cyprus new-build property is complex with a number of qualifying factors. For example, if you can prove that your property will be your primary and permanent residence for the next ten years, you will be eligible for a reduced VAT rate (currently 5%) on the first two hundred square metres. For the remaining square metres the current rate of VAT payable is 19%.*

You must also be over eighteen years old and able to demonstrate that you do not pay a reduced VAT rate on any other property in Cyprus to be eligible for this reduction. If you’re purchasing a second hand home you’re in luck as currently, all types of second hand property are exempt from VAT.

Capital Gains Tax (CGT)

On 31st December 2016, the concession exempting buyers from Capital Gains Tax (CGT) came to an end. Consequently, anyone buying new build property in 2017 is liable for CGT if and when they sell their property. This ruling is subject to change however and there are exemptions. Remember that for the most efficient tax planning, the services of an accredited legal advisor are essential. We’ve been selling new developments in Cyprus long enough to understand the importance of using a reputable law firm to negotiate the buying process, so do not hesitate to get in touch if you need guidance at any stage of the process.

Stamp Duty

Stamp duty is currently calculated at 0.15% on properties with a value up to €170,000 euros. If your property purchase is in excess of €170,000, stamp duty increases to 0.2%.*

* All quoted tax rates are intended as guidelines which are correct as of March 2017, but subject to change following this date.


What are the tax benefits of buying new build property in Cyprus?

Immovable Property Tax (IPT)

The good news is that Immovable Property Tax (IPT), previously payable to the Tax Department in Cyprus, was reduced in 2016 and abolished altogether for the 2017 tax year which runs from 1st January - 31st December in Cyprus.

The Golden Visa

Applying for the Cyprus Golden Visa (EU Citizenship) or a Permanent Residency Visa can lead to various tax benefits and exemptions. Read more about this scheme in our blog-series on the Golden Visa.

A generous taxation system

Cyprus is generally viewed as having one of the most generous taxation systems in the world. There is a low tax rate on pensions and no inheritance tax. Double-tax treaties also exist between Cyprus and a number of countries including Russia, the UK and USA. Browse the Cyprus Ministry of Finance site for more information.

The evolving property tax situation in Cyprus is intended to protect the interests of property buyers and property owners alike. If you have any questions about property tax in Cyprus, contact the Winkworth International Development office.

 

Interested in selling or letting with us?

Contact Winkworth International Admin or call us at +44 (0)20 7240 3322