Capital Gains Tax on Real Estate Sales in Cyprus
Guide to Capital Gains Tax (CGT) in Cyprus real estate sales. Covers rates, exemptions, deductions, scenarios, and practical case studies. Capital Gains Tax (CGT) is applied to the profit earned when selling immovable property in Cyprus. It is one of the most significant taxes for property sellers, both local and foreign.
CGT Tax Rate in Cyprus
• Flat rate of 20% on the gain from property disposal.
• Gain is calculated as the difference between the selling price and acquisition cost.
Exemptions from CGT in Cyprus
• Primary Residence: Exemption up to €85,430, provided the owner lived there for at least 5 years.
• Inheritance: Transfers through inheritance are exempt.
• Family Transfers: Parent-to-child or between spouses are exempt.
• Land Expropriation: Compensation for compulsory acquisition is exempt.
Deductions Allowed
• Inflation adjustment based on the acquisition year.
• Improvement costs (renovations, extensions) supported by receipts.
• Transfer fees, stamp duty, and legal expenses are deducted from gains.
Special Rules for Non-Residents
• Non-residents pay the same 20% rate.
• Exemptions apply equally to foreign property owners.
• Tax is applied only to property located in Cyprus.
Case Study: Profitable Villa Resale
A villa purchased for €200,000 in 2010 was sold for €400,000 in 2025:
• Gain: €200,000.
• Deductible expenses: €20,000 renovations + €5,000 transfer/legal fees.
• Taxable gain: €175,000.
• CGT: €35,000 (20%).
Case Study: Exempt Primary Residence
A primary residence sold for €300,000 with a €100,000 gain:
• Owner lived there for 6 years.
• Exemption: €85,430.
• Taxable gain: €14,570.
• CGT: €2,914.
Checklist for Calculating CGT in Cyprus
1. Confirm acquisition and sale price.
2. Adjust for inflation using official indices.
3. Deduct improvement costs with receipts.
4. Subtract transfer and legal fees.
5. Apply exemptions (primary residence, inheritance, family transfers).
6. Calculate 20% on the remaining taxable gain.
FAQs on CGT in Cyprus
Q: Do foreigners pay CGT in Cyprus?
A: Yes, at the same rate as locals.
Q: Can I avoid CGT on my holiday home?
A: No, unless it qualifies as a primary residence.
Q: Are renovation costs deductible?
A: Yes, with valid receipts.
Q: Is there a lifetime exemption?
A: Yes, €85,430 for primary residence, used once per person.
Q: When is CGT due?
A: Upon property transfer, payable to the Tax Department.
Final Recommendations
Property sellers in Cyprus should plan for CGT early. Keeping detailed records of acquisition costs, improvements, and expenses helps minimise tax liability. Professional advice ensures proper application of exemptions and deductions.