Property Taxation and Fees in Cyprus: Complete Guide

Understand property taxes and fees in Cyprus, including VAT, transfer fees, capital gains, and stamp duty. Essential guide for buyers, investors, and homeowners.

Property Taxation and Fees in Cyprus

Property ownership in Cyprus comes with a range of taxes and fees that buyers and investors must understand. Knowing these costs in advance ensures accurate budgeting and prevents unpleasant surprises.

Key Property Taxes in Cyprus

• Value Added Tax (VAT): 19% applies to new properties, with a reduced 5% rate for first-time homebuyers using the property as their primary residence.
• Capital Gains Tax (CGT): 20% on profits from property sales, with exemptions for primary residences and certain allowances.
• Immovable Property Tax (IPT): Abolished in 2017, previously paid annually.
• Local Municipality Taxes: Small annual fees for garbage collection, street lighting, and sewage (typically €100–€300).

Transfer Fees

Transfer fees are payable to the Land Registry when ownership is transferred. They are calculated on the property’s market value:

• 3% on the first €85,000.
• 5% on the next €85,000.
• 8% on amounts above €170,000.

Note: If VAT was paid on the purchase, transfer fees are exempt.

Stamp Duty

Stamp duty applies to all property purchase contracts:

• 0% for contracts under €5,000.
• 0.15% for contracts between €5,001–€170,000.
• 0.2% for contracts above €170,000.

The maximum stamp duty is capped at €20,000.

Inheritance and Gift Tax

Cyprus does not impose inheritance or gift tax on property transfers. However, legal fees, transfer fees, and local administrative costs still apply.

Case Study: VAT vs. Transfer Fees

In 2020, a buyer purchased a new apartment in Limassol for €250,000. Because VAT was applied at 5% (as it was the buyer’s first home), no transfer fees were payable. This saved the buyer approximately €12,000 in fees.

Case Study: Capital Gains Tax Liability

A British investor sold a villa in Paphos in 2018 for €500,000, originally purchased for €300,000. The profit of €200,000 was subject to 20% CGT, minus exemptions for improvement expenses and personal allowances, resulting in a €30,000 tax bill.

Checklist for Buyers and Investors

1. Determine if VAT applies to your purchase.
2. Budget for transfer fees if VAT does not apply.
3. Factor in capital gains tax when planning resale.
4. Account for annual municipal taxes.
5. Ensure stamp duty is paid within deadlines.
6. Seek professional tax advice for complex transactions.

FAQs on Property Taxation in Cyprus

Q: Do foreign buyers pay higher taxes?
A: No, all buyers are subject to the same rates.

Q: Is VAT refundable?
A: No, VAT is a consumption tax and is not refundable on property purchases.

Q: Can I avoid capital gains tax?
A: Exemptions exist for primary residences and certain allowances.

Q: Are annual property taxes high in Cyprus?
A: No, municipal taxes are relatively low compared to other EU countries.

Q: When is stamp duty due?
A: Within 30 days of signing the contract.

Final Recommendations

Understanding property taxation in Cyprus is essential for all buyers and investors. By budgeting correctly and seeking professional advice, you can avoid unexpected costs and make informed decisions.