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Cyprus property taxes in 2017

There have been a number of changes to various property taxes in Cyprus in recent times and a summary of the impact of those changes for individuals with property on the island are summarised below.

Cyprus property taxesRECENT changes to property taxes in Cyprus will benefit both those who have purchased property and those planning to purchase. Here is a summary of the taxes that apply as we enter 2017.

Immovable Property Tax payable to the Tax Department

Immovable Property Tax (IPT) was reduced in 2016 to approximately a quarter of that in the previous year and is abolished in 2017.

Property Tax payable to Communities and Municipalities

This ‘local’ property tax has not been abolished and those with property on the island will continue to pay this ‘local’ tax, which is calculated on the Land Registry’s assessment of the 1980 value of the property.

Property Transfer Fees

The temporary reductions in Property Transfer Fees that that came into force in 2015 and applied to transfers that took place by 31 December 2016 was made permanent in July 2016.

 (a) If VAT was paid on the purchase price of the property, no Property Transfer Fees are payable.

(b) If VAT was not paid on the purchase price of the property, the Property Transfer Fees are reduced by 50%.

However if the Director of the Land Registry considers that the price stated on the contract of sale does not reflect the market value of the property at its date of purchase he may, at his discretion, charge the full Property Transfer Fees based on the Land Registry’s assessment of the market value of the property at its date of sale less the price stated on the contract of sale.

(The Department of Lands and Surveys has an on-line Transfer Fees Calculator​​​​​​​​​​​​​​​​​​​​ .)

Capital Gains Tax

The Capital Gains Tax concession introduced in mid-2015 that exempted those who purchased property after it came into force and 31 December 2016 from paying Capital Gains Tax regardless of when the property was sold has not been extended.

As a consequence those who buy property in 2017 will be liable for Capital Gains Tax when they sell the property.

Stamp Duty

Stamp duty is calculated on the value of the purchase agreement and remains unchanged at the rate of:

€0 to €5,000 – zero

€5,001 to €170,000 – 0.15%

Greater than €170,000 – 0.2%*

* Capped at a maximum of €20,000.

I expect that we will see further changes to property taxes during the year ahead. Tune in for the latest updates.

Readers' comments

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  • Steve says:

    @ Brian If you are in Paphos district and bought from a big developer, as soon as you apply using the enclaved buyer legislation, you will probably have an invitation from the developer to apply through the developer for title deeds, which you will receive in a few weeks via the developer (to make sure you have paid whatever he is asking), not direct from the Dept of Land and Surveys.

    If you stick with the application independent of the developer, the weeks will turn into months and maybe years, who knows? However you will pay less for them as Nigel says, including not having to pay for the developers IPT, which contains any penalties for late payment and interest that you cannot claim back from the taxman.

  • sky says:

    @Nigel
    You’re sure of that?

    I’m asking this question because if “no VAT was paid” for the houses bought in the 90s it was thanks to the regulation at the time which was forbidding it.

    So how can one pay taxes based on something which hasn’t been done (i.e. paying the VAT), when it wasn’t just possible, by law, to do it?

    Looks like a loophole to me…

    Ed: Let me put it like this, if you bought a property before the law was changed in 2015 (regardless of whether you paid VAT on its purchase price) you would have paid Property Transfer Fees at the full rate.

    There was no regulation preventing VAT being added to the purchase price of a home. Prior to Cyprus’ accession to the European Union in 2004, the supply of immovable property was exempt from Value Added Tax (VAT). If you bought a home from a property developer you are liable for VAT if the application for a Town Planning Permit was submitted after 1st May 2004.

    I paid VAT on my house before VAT was introduced because I had a custom home built by a building contractor who charged VAT at the rate on the construction costs at the rate in force at that time.

  • sky says:

    @Nigel
    Concerning the property transfer fees, what’s happening to the houses sold second-hand today, but which were bought new before VAT was introduced for properties? (for example, a house built in the 90’s, and sold second hand today)?

    Ed: The Property Transfer Fees are reduced by 50% as no VAT was paid.

  • Brian says:

    We haven’t paid the immovable property tax. I looked into it last year and went too the tax office with paper work etc etc and told we didn’t have too pay anything. But the developer said we owe them £1600 euro ?? Does anyone know why we pay all our other things direct debit and have done since buying our apartment in 2007. We are not trying too get out of paying but are unsure if this is correct thanks.

    Ed: If you have the Title Deed to the property and the Tax Department says you owe nothing, you don’t owe the developer anything.

    If you don’t have the deed I suggest you apply as described in my article – Applying for Title Deeds. The Land Registry will advise you if you owe any taxes and will ask you to pay them. Although you may have to pay Immovable Property Tax (IPT) you will pay at a much lower rate than that paid by the developer.

    If you through you contract of sale it will probably contain a clause similar to the following:

    “From the date of delivery of the Property to the Purchasers, the Purchasers shall be obliged to pay all taxes or rates corresponding to the Property in proportion to the whole project during the period prior to the registration of the Property in the name of the Purchasers.”

    So you will need to pay IPT from the year in which you took delivery of the property (not when you bought it.)

    There’s an article explaining IPT by the Cyprus Property Action Group at http://www.news.cyprus-property-buyers.com/2008/10/19/immovable-property-tax-fraudulent-practices/id=00517 )

  • Cecil Habib says:

    There is nothing in these regulations that can bring back the boom years of the 90’s. The incentives at that time encouraged retirees to transfer enormous funds for retirement homes. That was really quality migration which generated jobs and great successes by supermarkets, lawyers, estate agents, builders, retail shops etc etc. Government officials do not have to have the intelligence of rocket scientists to make the island boom again. Don’t introduce taxes! Instead remove taxes and quality money will flow back.
    Cecil Habib

  • Deanna says:

    Good summary for reference, thank you.

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