Overview of Property Taxation in Cyprus

Learn about property taxation in Cyprus, including transfer fees, stamp duty, VAT, and municipal charges. Updated overview for foreign and local buyers. Property taxation in Cyprus has undergone major reforms over the last decade. While the Immovable Property Tax (IPT) was abolished in 2017, property buyers and owners are still subject to several key taxes and fees.

Key Cyprus Property-Related Taxes

• Transfer Fees: Payable to the Land Registry when property ownership is transferred.
• Stamp Duty: Imposed on property contracts, calculated based on contract value.
• VAT: Payable on new property purchases, with rates varying depending on property use.
• Municipal Taxes: Annual local charges for waste collection, street lighting, and other services.

Abolition of Cyprus Immovable Property Tax

• Previously applied annually based on property value.
• Abolished in 2017 to simplify the tax system.
• Replaced by local municipal property taxes, which are significantly lower.
• Improved attractiveness of the Cyprus real estate market for investors.

Case Study: Foreign Investor in Limassol

A British investor purchased a €400,000 apartment in Limassol. They paid 0.15% stamp duty, 19% VAT on the new property, and annual municipal taxes of around €250. The absence of IPT reduced long-term holding costs.

Case Study: Retiree in Paphos

A Russian retiree bought a resale villa for €300,000. They were exempt from VAT but paid transfer fees of around 3–5% of the property value. Annual municipal charges were modest, under €200.

Checklist of Tax Obligations for Property Owners

1. Pay transfer fees at Land Registry (unless exempt under VAT rules).
2. Settle stamp duty within 30 days of signing the Sales Agreement.
3. Pay VAT if applicable (reduced rate for first-time home buyers).
4. Register and pay annual municipal property taxes.

5. Ensure tax compliance to avoid penalties or delays in ownership transfer.

FAQs on Cyprus Property Taxation

Q: Is Immovable Property Tax still payable?
A: No, it was abolished in 2017.

Q: How much are transfer fees?
A: Typically 3–8% of property value, but reduced or exempt if VAT is paid.

Q: What is the VAT rate on new homes?
A: Standard rate is 19%, but first-time buyers may qualify for 5%.

Q: Are municipal taxes high?
A: No, usually between €100–€300 annually.

Q: Do foreigners pay higher property taxes?
A: No, foreign and local buyers are treated equally.

Final Recommendations

Cyprus offers a transparent and relatively low property tax regime compared to other EU countries. With IPT abolished, only transfer fees, VAT, and modest municipal charges apply. Foreign buyers should budget for these costs and seek professional advice to ensure compliance.