As a property seller taxation on profit is currently 20%; Calculate the amount by deducting the purchase price on your original contract and the total amount of any home improvements you made, and any agent’s commission you paid or are due to pay on the sale of your property from the selling price to the vendor to establish how much tax will be due.
Happily, there is a maximum of 50,000 Cyprus pounds (85,000 Euro) tax relief for those that can prove five years’ consecutive ownership of one property, and there is at least 10,000 Cyprus pounds (17,000 Euro) tax relief for lesser periods per person on the purchase contract.
Property Transfer Tax is applied 3, 5 and 8% of the contract sale price, however contract sale prices are often reviewed and adjusted by the land registry office for taxation purposes, the amount you pay depends on the property' value according to the land registry office. It is important to note that the number of legitimate owners added to the title deed will influence the amount of tax due, since each individual added legitimately has tax concessions entitlement , thus most purchasers try to keep their properties in the 3 and 5% bands .
The bands are as follows up to (aprox) 85,500 euros= 3% From (aprox) 85,500 to (aprox) 171,000 euros = 5% Over 171,000 euros will incur the 8% rate of taxation.
Immovable Property Tax, is charged annually as follows;
Property value below 171,225 euros – Nil Rated Immovable Property Tax.
Property value: 171,225 - 428,057 euros = 0.2% per thousand euros.
Property value: 428,058 - 856,114 euros = 0.25% per thousand euros.
Property value: 856,116 -1,712,228 euros = 0.3% per thousand euros.
Property value: 1712230 euro and over = 0.35% per thousand euros.
There are also minor taxes that must be paid and various certificates must be obtained and presented to the Land Registry Office.
There is a huge amount of leg work to do, including visiting many government offices. We thoroughly advise you to get a lawyer.
VAT concessions have special rules: they apply to owners of property who were allowed VAT concessions on their property purchase.
If you have owned the property for ten years or more, there will be no claw-back on the VAT rebate received from the Cyprus Authorities.
In all cases where ownership is less than ten years; the VAT office will require a payment of 10% for each year you are short of ten years ownership.
For example if you received a 25,000 euro concession when you purchased, and then sell the property after 8 years ownership you will have to repay 5000 euros to the VAT office. (10% claw back per year (2500 X 2 years = 5000)).
N.B. Formerly it had been common practice for property to be sold/purchased in Cyprus on the basis of "Specific Performance" contracts were then logged at the Land Registry office, (in particular with new builds) for which there is provision and legislation under Cypriot statutory law.
As of June 2014, upgraded and more stringent "Specific Performance" regulations were approved and passed as law , resulting in better protection for the buyer.
Whilst we do not disagree with the "Specific Performance" model, and note that many legitimate and successful transactions have already taken place, we stress that purchasing a property with Title Deeds available is by far the less complicated and better option for potential buyers.
However in cases where properties are nearing delivery or completion, you can verify that the "Certification of Completion" has been applied for; by requesting the seller/developer to provide you with an AX**** application number.
AX**** application numbers prove by default the notion that the process for finalising the paperwork and proving there are no outstanding debts on the development/property are well underway, as well as being the last stages of checking and recording by the Cyprus authorities, after which Title Deeds are available for issue.