Property taxation in Cyprus

When you buy a home in Cyprus you have to pay a fee to the Land Registry office to have it transferred into your name. This is calculated based on the value of the property on the purchase date and the market value of the property, not the price you may have negotiated.

This means if you viewed a property advertised at €175,000 and negotiated the price down to €165,000 you will still pay the higher transfer rate of 8%.

The current Cyprus property transfer tax rates are:

It’s worth noting that there are some situations when you may not have to pay the transfer fee:

• If you are a first-time buyer in Cyprus and the property will be your main residence you may be eligible for a discount of up to 50%.
• If the property purchase price includes VAT.
• When you are transferring the property to a child there is no tax.
• Transfer to a spouse entails a 0.1% tax rate.
• To third-degree relatives there is a 0.1% tax rate.

Stamp duty is another Cyprus taxation fee you must pay when the property is registered. This is a tax due on the land and building (different from the transfer tax).

The current rates are:

An additional Cyprus property tax is the VAT charged when you purchase a property. This is at the standard rate of 19%.

However, if you are a first-time Cyprus buyer and the property will be your main residence you are entitled to a reduction in the VAT rate to 5% on the first 190 square metres of the property. The remaining space will be charged at 19%.

The immovable property tax in Cyprus was abolished in 2017. There is still much outdated information on the internet which is why we want to clarify this. For reference, immovable property is any building that is fixed.

This part of the Cyprus taxation system is payable annually and ranges from 0.1%-0.2% of the market value of the property, depending on where you live. This covers rubbish collection, sewage (in some areas) and general municipal services.

When selling property in Cyprus tax has to be paid if you make a profit and are not purchasing another home in Cyprus. If you are buying another property in Cyprus the gain will be incorporated when and if you sell the next property.

The current capital gains tax rate is 20% of the property value at the time of the sale (i.e. including any increase in value) for both residents and non-residents.

There is the option for Cyprus residents to obtain a one-off Cyprus taxation allowance of up to €85,000 for their first property sale. For future sales, the rate is €17,086.

If you are a resident of Cyprus you will be taxed on your worldwide income, regardless of where it comes from. The Cyprus double taxation agreement with the UK means that you will not be charged tax in both countries. The treaty states that you will only pay tax in your main country of residence.

To determine residency, the 190-day rule generally applies. If you spend more than 190 days in Cyprus within a tax year, you’re typically considered a resident for tax purposes.

If you decide to invest in property in Cyprus and rent it out you will be charged income tax that is classed as personal income. This is currently set on a scale:

If you are a Cyprus tax resident there are some deductions you can claim such as repairs and maintenance of the building. You should check with your accountant what the allowable deductions for rental property in Cyprus are.

Owning property in Cyprus is an attractive proposition for many foreigners, but understanding the Cyprus taxation implications is very important. While Cyprus offers a relatively favourable tax environment, there are several taxes to consider when purchasing a property, such as the transfer fee and stamp duty. The system can be complicated, but having basic knowledge means you can ask the right questions when buying or selling a property in Cyprus.

Whether you’re searching for a family home in Cyprus or an investment property, we would be delighted to assist you in finding your property in Cyprus – please get in touch with any questions you may have.