Comprehensive guide to property taxes in Cyprus, including VAT, transfer fees, municipal charges, and capital gains tax. Essential for buyers and investors.

Understanding Property Taxes in Cyprus

Property ownership in Cyprus comes with specific tax obligations. Buyers and investors must understand both one-time and ongoing taxes to avoid financial surprises.

Value Added Tax (VAT)

• Standard rate: 19% on new properties.
• Reduced rate: 5% for first-time buyers on main residences up to 200 sqm.
• Exempt: Resale (secondary market) properties are generally VAT exempt.

Transfer Fees

• Payable when Title Deeds are transferred.
• Rates: 3% on the first €85,000, 5% on €85,001–€170,000, 8% above €170,000.
• Exempt if VAT was paid on the property.
• Discounts apply for joint ownership.

Stamp Duty

• 0.15% on property values up to €170,000.
• 0.20% on values above €170,000.
• Maximum capped at €20,000 per transaction.

Capital Gains Tax

• Charged at 20% on profit from property sale.
• Exemptions: First €85,430 lifetime exemption for residents, exemptions for inheritance and gifts to family.
• Improvements to property may be deducted from taxable gain.

Municipal and Local Taxes

• Municipal property tax: Based on property value and location.
• Refuse collection and sewage board fees.
• Typically €100–€300 annually depending on district.

Immovable Property Tax (IPT)

• Abolished in 2017, previously charged annually by the Tax Department.
• Now replaced by municipal property charges.

Tax Obligations for Residents vs. Non-Residents

• Residents: Taxed on worldwide income, including rental income from Cyprus properties.
• Non-residents: Taxed only on income derived in Cyprus, e.g., rental profits or capital gains.

Case Study: VAT Exemption Savings

In 2019, a first-time buyer in Larnaca purchased a 180 sqm apartment. By applying for the 5% VAT reduction, they saved €25,000 in upfront tax costs.

Case Study: Capital Gains Liability

A British investor sold a villa in Paphos in 2021, making a €100,000 profit. After deducting allowable expenses, they paid €20,000 in capital gains tax.

Checklist for Buyers and Owners

1. Confirm if VAT applies to your purchase.
2. Budget for transfer fees and stamp duty.
3. Calculate potential capital gains on resale.
4. Register with local municipality for annual taxes.
5. Keep receipts for property improvements to offset tax.
6. Consult a tax advisor for cross-border obligations.

FAQs on Property Taxes in Cyprus

Q: Do I pay VAT on resale properties?
A: No, VAT only applies to new properties.

Q: Are transfer fees negotiable?
A: No, but discounts apply in certain cases.

Q: How are rental incomes taxed?
A: Rental income is subject to personal income tax rates.

Q: Do non-residents pay capital gains tax?
A: Yes, if the property is located in Cyprus.

Q: Are there double taxation agreements?
A: Yes, Cyprus has treaties with over 60 countries.

Final Recommendations

Understanding Cyprus property taxes is vital for accurate budgeting and compliance. By planning ahead and consulting experts, buyers can minimise liabilities and maximise investment returns.