Property, taxes & fees
Property, Taxes & Fees
Owning property in Cyprus comes with a number of benefits, from favourable tax conditions to straightforward legal procedures. Below is an overview of the key taxes and fees associated with purchasing and maintaining property on the island. This information is provided for general guidance and does not constitute legal advice.
Transfer Fees
When a property is transferred and registered in the buyer’s name, the District Land Registry Office applies a transfer fee based on the property’s market value at the time of purchase. If the property is registered in joint names (e.g. spouses or co-buyers), the purchase value is split accordingly, reducing the transfer fees payable by each individual.
Immovable Property Tax
The registered owner of the property is liable to pay an annual immovable property tax. This is calculated based on the property’s market value as of January 1st, 1980.
Capital Gains Tax
Capital gains tax of 20% applies to profits made from the sale of immovable property in Cyprus. Each individual is granted an exemption of up to €17,086.14. If the property was acquired before 1/1/1980, the gain is calculated as the difference between the sale price and its market value on that date.
Additional allowances apply for inflation, transfer fees paid, and the cost of property improvements. For private residences, owners may claim an exemption of up to €85,430.07 if they have lived in the property continuously for at least five years prior to the sale.
Stamp Duty
The sale agreement must be stamped within one month of signing. Stamp duty is calculated based on the purchase price as follows:
- Up to €170,860.00: 1.5‰ (per thousand)
- Between €170,861.00 and €8,550,000.00: 2‰
- Over €8,550,000.00: fixed fee of €17,100.00
Local Authority Taxes & Rates
Annual local authority taxes vary by municipality and typically range between €85 and €256, depending on the property size. These cover refuse collection, street lighting, sewerage and other municipal services. Utilities such as electricity, water, and telecommunications are billed separately based on usage.
VAT on Property
As of 14 January 2013, new legislation applies VAT to the sale of newly constructed properties, provided the planning permit application was submitted after this date. The standard VAT rate is 18%.
A reduced VAT rate of 5% is available for first-time buyers purchasing a primary residence up to 250 sqm. In some cases, eligible buyers may receive a grant when purchasing a newly built property intended as their main home.
Tax Advantages
Cyprus offers a highly favourable tax regime for residents. Retired individuals receiving foreign pensions are taxed at just 5% annually, with the first €3,417 exempt. In addition, Cyprus has signed Double Taxation Treaties with numerous countries, helping residents avoid being taxed in both jurisdictions.
Duty-Free Privileges
Those relocating to Cyprus can benefit from duty-free privileges on cars and household goods. Non-EU citizens are eligible for full duty-free status. For EU citizens, these privileges now apply only to retirees following Cyprus' accession to the European Union.