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| Real Estate Australia, Property Australia, Buy Australia, Rent Australia, Share Australia |
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Essential Info
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BUYING A PROPERTY |
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Cypriot citizens are allowed to purchase real estate within Cyprus without any restrictions.
Under the Immovable Property Acquisition Act, foreigners, companies and trusts may
acquire freehold immovable property in Cyprus subject to prior permission from the
Council of Ministers.
Non-Cypriot citizens are permitted to acquire:
- An apartment
- A house
- A block of land on which to build a house with restrictions (land size not exceeding
4014 m²)
These restrictions on the acquisition of property will be lifted for EU-citizens
from 2009.
Upon exchange and signing of a contract of purchase, permission must be sought from
the Council of Ministers by a written application from the foreign buyer.
In order for the contract to be legally binding, the purchaser must deposit the
contract within two months at the Land Titles Office. Ownership in Cyprus is denoted
by title deeds, issued by the Land Titles Office.
The prospective buyer needs to apply for the consent of the Council of Ministers
(form 145) as well as a permit from the Central Bank of Cyprus, concerning the transfer
of funds.
Transfer of ownership from Vendor to Purchaser is accomplished by a simple procedure
through the Cyprus Land Registry either by the purchaser or by a third party with
the power of attorney.
Evidence of payment for the property with Foreign Exchange must be provided as it
is a prerequisite for the registration.
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TRANSFER FEES |
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Transfer fees are payable to the Land Titles Office by the purchaser on the purchase
price upon transfer of the property to the buyer’s name, as per the table shown
below:
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VALUE OF PROPERTY (€)
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TRANSFER FEES (%)
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Up to € 85,430
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3.0% |
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From € 85,431 – € 170,860
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5.0% |
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Over € 170,860
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8.0% |
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LAND TAX
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This tax is payable annually on property owned as of 1st January of each year at
its current market value using a base year, 01.01.1980. This is shown in the table
below:
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VALUE
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ANNUAL TAX
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Up to €170,860
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exempted
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€ 170,861 – 427,150
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€ 2, 0 per thousand
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€ 427,151 – 854,300
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€ 3, 0 per thousand
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Over € 854,300
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£ 3, 5 per thousand
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STAMP DUTY
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The purchaser is required to pay Stamp Duty prior to depositing the contract of
purchase at the Land Titles Office. This Stamp Duty is payable to the Tax Authorities
and is due within 30 days of signing and exchanging the contract. This is based
on the following table:
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VALUE OF PROPERTY
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DUTY
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Up to € 170,860
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€ 1, 5 per thousand
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Over € 170,860
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€ 2, 0 per thousand
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SELLING A PROPERTY
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Purchased property by a foreigner can be sold at any time and the proceeds of the
sale can be transferred overseas.
The equivalent of the total purchase price can be transferred immediately while
the remaining balance from the sale can be transferred at the amount of € 17,086
per year, starting from the year after the sale.
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CAPITAL GAINS TAX
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Capital gains tax is paid at the rate of 20% on the net profit that arises from
a sale of real estate. The calculation is as follows:
Taxable Gain = Sale Proceeds – (Purchase Price + Professional and Legal Fees + Agent’s
Commission + Interest Paid + Indexation Profit + € 17.086 per individual)
Note: The indexation profit is profit gained as a result of changes in the consumer
price index; this is provided by the Taxation Department of Cyprus annually.
Furthermore, a € 85,430 allowance is given if the property sold was the prime residence
of the vendor for at least five years. This is only permitted once per individual.
If the profit has not been exhausted during the first sale, the balance will be
carried forward to the next sale.
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For Example: |
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CAPITAL GAINS TAX:
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(€)
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Proceeds from Sale
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150,000
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Less Cost of Acquisition
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(75,000)
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Less Inflation allowance (75.000 x 10%)
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(7.500)
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Gains from Property
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67,500
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Less Investment allowance* (17,086)
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(17,086)
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TAXABLE Gain on Sale of Property
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50,414
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Capital Gains Tax Due (7.500 x 20%)
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10,082.80
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* According to the case (discussed below)
The following cases are exempt from Capital Gains Tax:
- Donations between relatives up to 3rd degree of kindred;
- Donations made to Limited Companies by shareholders of the donor company that constitute
to be members for at least 5 years;
- Donations from family companies to their shareholders; this only applies to cases
where the property was originally acquired by the company by donation;
- Donations to Charitable Organisations or to the Republic of Cyprus;
- Exchanges of permanent residence;
- Compulsory acquisitions; or
- Transfers by reason of death.
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VALUE ADDED TAX
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V.A.T at the rate of 15% applies to all new constructions as of 1st May 2004. |
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