Real Estate Taxes and Fees in Cyprus

Cyprus is known for its attractive real estate market, with stunning natural beauty, rich cultural heritage and modern infrastructure making it an ideal place for property investment. However, as with any investment, it's important to understand the taxes and fees that come with buying property in the country. This article will give you a comprehensive overview of the various real estate taxes you should be aware of when purchasing property in Cyprus.

Starting with VAT (Value Added Tax), it's a one-time payment that must be made by the purchaser of new properties and land. The standard rate of VAT is 19%, but there is a reduced rate of 5% that can be applied to the purchase of residential properties. To be eligible for the reduced rate, the applicant must use the property as their primary and permanent residence in Cyprus for a minimum of 10 years, and they must not have any other residence in Cyprus with a reduced VAT rate. This reduction only applies to individual applicants over the age of 18 and does not apply to legal entities. If a VAT-reduced property is sold or rented out before the 10-year period is up, the previously-effected VAT refund must be returned to the state for the remaining years.

The next tax to consider is the Property Ownership Transfer Fee, which is a one-time payment made by the property buyer. The fee varies depending on the value of the property, with rates ranging from 3% for properties worth €0 to €85,000 to 8% for properties worth more than €170,000. If the property is taxable for VAT, there are no transfer fees.

Stamp Duty is another one-time payment that must be made by the purchaser of real estate or land. This tax must be paid within 30 days of the date of co-signing the property acquisition contract in Cyprus in order for the transaction to be registered with the Inland Revenue Department. The rates vary depending on the value of the property, with 0% for properties worth up to €5,000, 0.15% for properties worth €5,000 to €17,860, and 0.2% for properties worth more than €170,860. The maximum amount of stamp duty payable per agreement is €20,000.

Another tax to consider is the Municipal Tax, which is an annual tax paid by property owners for services such as garbage collection, sewage, lighting of common areas, and more. The amount of the tax ranges from €85 to €500 per year. Finally, if you're selling property in Cyprus, you'll be subject to Capital Gains Tax (CGT) at a rate of 20%. This tax is applied to gains arising from the sale of immovable property in the country.

In conclusion, when buying property in Cyprus, it's important to be aware of the various real estate taxes you'll be required to pay. By understanding the fees involved, you can make a more informed decision and plan your finances accordingly.