Immovable Property Tax
As of 1/1/2017 Immovable property tax is abolished
Capital Gains Tax
Cyprus Tax Laws
Any Capital Gain is liable to be taxed at the rate of 20%. Subject to certain conditions, individuals may claim the following deductions:
- Up to €85,430 if the disposal relates to a private residence.
- Up to €25,629 if the disposal is made by a farmer and it relates to agricultural land.
- Up to €17,086 on any other disposal.
- These deductions are granted once in the lifetime of the individual, until fully exhausted and if an individual claims a combination of them, the maximum deduction granted cannot exceed €85,430.
Under the law, certain disposals are not subject to Capital Gains Tax:
- Transfers arising on death.
- Gifts made from parent to child or between spouses or between up to third degree relatives. (A third degree relative is one with whom an individual shares about one-eighth (12.5%) of their genes. Third-degree relatives include your great-grandparents, great-aunts, great-uncles, and first cousins).
- Gifts to a company where the company shareholders are members of the donor’s family and the shareholders continue to be members of the family for five years after the date of the transfer.
- Gifts by a family company to its shareholders provided such property was originally donated to the company. The property must be kept by the recipient for at least three years. For gifts that were made by the company to its shareholders that took place before 28 May 1999, the exemption applies irrespective of how the immovable property was originally acquired by the company.
- Gifts to charities and the Government.
- Transfers as a result of reorganizations.
- Exchange or disposal of immovable property under the Agricultural Land (Consolidation) Laws.
- Expropriations (for example, if the property is compulsory purchased).
- Exchange of properties, provided that a number of conditions are met:
- The Land Registry determines that the two properties are of identical value;
- The whole of the gain made on the exchange has been used to acquire the other property. The gain that is not taxable is deducted from the cost of the new property, i.e. the payment of tax is deferred until the disposal of the new property;
- The parties wishing to exchange have their Title Deeds;
- The exchange between the parties has to be simultaneous.
Property exchange is complex, and should not be attempted without professional assistance.
The base date for calculating the acquisition cost of property is 1st January, 1980. If the property was built after this date it is calculated backwards.
Under the law, the chargeable gain as adjusted for inflation, but certain lifetime exemptions apply to individuals for the disposal of their main residence:
Further allowances are granted for ‘Allowable Expenses’:
- Property transfer fees.
- Stamp duty.
- Estate agent’s commission – but only if the estate agent is licensed by the Cyprus Real Estate Agents’ Association.
- Legal fees.
- Accepted capital additions and improvements – planning permission where necessary.
Indexation can be applied to the above expenses as well as the initial purchase price and must be submitted with invoices and receipts for the costs incurred.
Additional allowable expenses are also granted for:
- Immovable Property Tax.
- Interest on loans used to buy the Property, assuming that the interest payments have not been used to offset other tax liabilities; e.g. Income Tax.
These expenses cannot be indexed.