Overview of Property Taxation in Cyprus

Comprehensive guide to property taxation in Cyprus. Covers transfer fees, stamp duty, annual taxes, capital gains tax, double tax treaties, case studies, checklists, and FAQs. Cyprus’ property taxation system has undergone significant reforms over the past decade, making it simpler and more attractive to foreign investors. While some taxes have been abolished, others remain central to property transactions and ownership.

Historical Background

• Immovable Property Tax (IPT) was abolished in 2017.
• Simplification aimed at boosting the real estate market.
• Current system focuses on transfer fees, stamp duty, capital gains tax, and local authority fees.

Key Taxes for Property Buyers and Owners

• Transfer Fees: Payable to Land Registry when transferring title.
• Stamp Duty: Levied on contracts of sale.
• Capital Gains Tax (CGT): Applied on profits from property sales.
• Local Authority Fees: Cover garbage collection, sewerage, and municipal services.
• VAT: 19% on new properties, with 5% reduced rate for primary residences.

Impact on Different Buyer Categories

• Cypriot Buyers: Subject to a full taxation framework.
• EU Nationals: Same tax treatment as Cypriots.
• Non-EU Buyers: Equal tax obligations, but may face additional legal steps for ownership approval.

Case Study: Tax-Efficient Purchase

A Cypriot buyer purchased a new apartment as a primary residence:
• Applied for a reduced 5% VAT rate.
• Paid minimal stamp duty due to lower property price.
• Outcome: Significant tax savings.

Case Study: Unexpected Tax Liability

A foreign investor sold a villa in Limassol:
• Ignored capital gains tax provisions.
• Faced an unexpected 20% CGT on profits.
• Outcome: Reduced investment returns.

Checklist of Property Taxes in Cyprus

1. Stamp duty on contract of sale.
2. Transfer fees (unless exempt due to VAT payment).
3. VAT on new properties (5% or 19%).
4. Capital gains tax on resale profits.
5. Local authority fees (annual).
6. Sewerage board fees (annual).

FAQs on Property Taxation in Cyprus

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

Q: Do foreigners pay higher taxes?
A: No, same rates apply to all buyers.

Q: What VAT rate applies to new homes?
A: 19% standard, 5% for primary residences under conditions.

Q: Are transfer fees always payable?
A: Not if VAT was already paid on the property.

Q: Is there an inheritance tax in Cyprus?
A: No, abolished in 2000.

Final Recommendations

Cyprus offers one of the most competitive property tax regimes in Europe. However, buyers must remain aware of applicable taxes to avoid unexpected liabilities and ensure full compliance.