Taxes and Cyprus Real Estate
Like anywhere else in the world, taxes and fees are added onto the costs of property purchases in Cyprus. When you take into consideration the new laws and the fees that you, as a buyer, are liable for, the cost is moderate in comparison to other countries. When purchasing property in the Republic of Cyprus, you should be aware of what these extra charges will be.All non-Cypriots purchasing a property must make an application to the Council of Ministers to acquire permission. This needs to be accompanied by a bank reference, a certificate proving that you do not have a criminal record, all the documentation and an affidavit stating that you do not own other property in Cyprus. Even if this procedure takes time there are no restrictions on using the property until permission is granted.
Below we have the current 2017 charges that you can expect to pay when purchasing property in Cyprus.
Estate Agents Fee
Real estate agents can by law charge a 3% fee on the value of the property, but they can charge more and in most cases this would be around 5%. This amount is their commission which is expected to be paid by the seller, or developer.
When it comes to legal fees, you have the option of hiring a property lawyer. Even though it is not compulsory, it is advisable that you do so, as this will protect you from anything that can go wrong and also help you with the paperwork which will give you a speedier outcome. Services fees of lawyers are negotiable and can cost you anything from €900 to €3,000, depending on the price of the property and the complexity of the purchase.
The value of the property you are purchasing will be determined by the Land Registry department and the following escalating scale, will apply in working out the transfer fees. Bear in mind that a property that is in joint names will pay on a lower price and inevitably save money on these taxes.
Property value up to €85,430 will pay 3% of the value of the property
Property value from €85,430 - €170,861 will pay 5% of the value of the property
Property over €170,861 will pay 8% of the value of the property
*However please note, No transfer fees will be payable on property that is subject to Value added Tax (VAT)
If Vat is not payable on the purchase price, the Transfer Fees are reduced by 50% as long as the Director of the Land Registry considers the value of the property stated reflects the true market value. In the event that the market value is more than the amount paid to purchase the property the Land Registry office could charge the full price on transfer fees.
Value added Tax (VAT)
If you purchase property in Cyprus, you are liable to pay VAT on the market value or purchase price of the property. The standard rate is currently 19%, but a reduced rate of 5% is payable on the acquisition of a first time residence which is not bigger that 250 square meters. The reduced rate will also apply to the construction of a residence as your primary and permanent residence in Cyprus, as long as you live in it for ten years. If you are not a first time buyer of property in Cyprus all subsequent purchases will be charged with 19% VAT.
Stamp duty is paid on the documents related to purchasing a property in Cyprus. This is a progressive rate which is capped at the maximum of €20,000. The charges are worked out as follows:
Property Up to €5,000 costs 0%
From €5,000 to €170,000 cost 1.50%
Over €170,000 cost 2%
If you need to borrow money from the bank, you are liable for a registration fee of 1% on the amount borrowed.
Immovable Property tax was abolished in 2017 and is no longer relevant. Local Property Tax is however still payable to the municipality you live in on a yearly basis, and this is worked out on the Land Registries assessment of the value of your property in 1980.
When calculated as a whole, you can expect to pay around 10% of the total cost of the property on taxes and fees.