It is important to be aware of the taxes involved in foreign property purchase. Below is a general guide to the taxes associated with property investment in Northern and Southern Cyprus.
Real Estate Transfer Tax to transfer the freehold into the purchaser’s name. This is levied on a progressive scale starting at 5% for up to CYP10,000, increasing in five steps up to a maximum of 8% for above CYP75,000.
Immovable Property Tax for residents, based on the value of the property at a rate of 0.2% between CYP100,000 and CYP250,000; 0.3% for up to CYP500,000 and 0.35% for over CYP500,000. The first CYP100,000 is tax exempt.
Stamp duty is charged at a rate of 0.15% on the first CYP100,000, and 0.2% above this threshold.
Local authority taxes, depending on the size of the property, range from 0.1% to 0.5% per annum to cover refuse collection, sewerage, street lighting etc.
Capital gains tax charged on disposals of real property and shares in companies owning real property in Cyprus. The first CYP10,000 of a gain is tax exempt. This exemption limit rises to CYP50,000 if the seller has lived in the property continuously for the previous five years.
In certain circumstances, further allowances are granted for transfer fees, inflation and improvements made to the house, but the total exemption cannot exceed a CYP50,000 limit.
Main taxes involved in property purchase in Northern Cyprus:
15% VAT is charged on most new build properties and is payable at the time of transfer of title.
3% Purchase Tax is also payable upon transfer of title and it is based on the Land Registry Valuation of the property. This valuation is usually considerably less than the selling price as only bricks, mortar and size of land are taken into consideration, not fixtures and fittings.
Local council taxes of 1% of the 3% Belediye are also payable.
There is generally no Capital Gains Tax payable on a property purchase, as the vendor is usually liable to pay this, unless otherwise stipulated in your contract.
If you are selling your property, Capital Gains Tax will be calculated based upon whether you are a private individual or a professional vendor. Every individual in Northern Cyprus has a once in a lifetime tax free sale option (for a house and land not exceeding approximately 1 donum). On all subsequent sales, Capital Gains Tax will be payable at 3.5%, provided you do not sell more than 3 properties in one year, making you a professional vendor. For professional vendors, there are no tax exemption rights and Capital Gains Tax is payable on every sale at a rate of 6.25%.
Capital Gains Tax is not payable if you sell the property before taking on the title in the case of an off-plan purchase. However, you will have to pay stamp duty on the contract at 0.5% of the contract value. This amount is doubled if you pay within 2 to 6 months of signing the Contract and is tripled if you pay after this period.
Get the latest property and investment opportunities direct to your inbox for FREE (you can unsubscribe anytime)
Cyprus to Resolve Title Deed Fiasco or No Further Bailout
Cyprus' Investment for Citizenship Programme Attracts €2bn
Cypriot Property Prices Down, Sales Up
Cyprus Property to Boom in 2015
Cypriot Property Shows First Signs of Stabilising
Cyprus Acts to Unlock Further €350m Troika Bailout
All property news from Cyprus
Subscribe to our RSS Feed
Fill out a requirements form and our experts will help you find a great selection of properties for sale in Cyprus.
Help me find property in Cyprus
Considering a property purchase in Cyprus or need to transfer currency to/from Cyprus?
Save Thousands in Currency Transfers
When considering a buying property in Cyprus, you are well advised to get expert mortgage advice from a mortgage broker.
Get a mortgage quote in Cyprus
Owners Direct is one of the UK's leading direct from owner rental websites and the first choice for holiday home owners who want a cost effective and easy way to fully book their properties.
Find out more
If you own or are about to purchase property in Cyprus, you get an insurance quote using our online insurance quote form.
Get Insurance in Cyprus
Do you have your British assets covered by a will?
Do you have your movable foreign assets covered by a will?
Have you made plans to protect your family in the event of your death?
Get more information on Wills
Everything you need to know about transferring your UK Pension is in our downloadable guide.
Get more information on Pensions
Subscribe to our newsletter and keep up to date with the latest and best investment opportunities around the world!