Other taxes, related to the purchase of a real estate property
Tax for the transfer of ownership rights (Transfer Fee)
In order for the buyer to become a registered property owner, the government needs to issue a Certificate of Ownership (Title Deed) for the purchased real estate, and afterwards to register it under the buyer’s name.
This process is accompanied by payment of the tax to the government, called the Tax for the transfer of ownership rights. The tax is calculated based on the purchase price indicated in the Sale and Purchase Agreement (excluding a VAT).
Price of the real estate, €
Lower than 85.000
From 85.001 to 170.000
The Transfer Tax is paid only for the purchase of a secondary real estate property. This tax is not charged on the purchase of primary real estate.
According to the Decree passed out by the Government of Cyprus, there is currently a tax benefit applicable to this tax. Upon purchase of a real estate property that is not subject to VAT, the Transfer Fee rate is reduced by 50%.
How it works in practice:
Let us assume, that you have purchased a property for €300.000. The Transfer Fee for the ownership rights, that you have to pay to the government, will be the sum of three amounts:
€85.000*1,5% + €85.000*2,5% + €130.000*4% = €8.600
You can decrease this amount. In what way?
For example, if the purchased property will be registered under two people, then, accordingly, you can save money.
In this case, each person indicated in the Sale and Purchase Agreement pays €150.000.
The tax will be calculated the following way:
(€85.000*1,5% + €85.000*2,5%)*2 = €6.800
Stamp duties are government fees for the purchase of real estate and are paid once, within 30 days after signing the real estate purchase agreement.
The stamp duties constitute 0.15% of the purchase price indicated in the Sale and Purchase Agreement (without the VAT), not exceeding €170.000, and 0.2% from that exceeding €170.000. The first €5.000 are not subject to the stamp duties.
It is possible to purchase real estate on Cyprus and register it under a legal entity. In such case, the buyer purchases the shares of the company, that the real estate belongs to. This way, you will not have to pay the taxes related to the purchase of real estate.
Capital Gain Tax
What happens if you decide to sell your real estate property on Cyprus?
According to the legislation of the Republic of Cyprus, you will have to pay a Capital Gains Tax of 20% on the profit (the difference between the purchase and the sale price). Considering the fact that the legislation of Cyprus foresees substantial benefits related to this tax, the actual tax rate will be significantly lower.
First of all, during the sale of real estate, the first €17.086 for each owner are not subject to tax.
Moreover, if you have been using the property you are selling for a period of not less than five years and are selling this property for the first time, the first €85.430 of the capital gain are not taxed.
What is more, additional operational expenses, such as the cost of repairs, and other material costs, are excluded from the taxable amount.
If the purchased property was registered under a Cypriot company, then the sale can be formalized as the sale of shares of the company. In such case, the buyer is not burdened by the tax of the transfer of ownership rights.
Proper compliance and arrangement of the above, will result in effective real estate transactions.
Grekodom Development company professionally solves issues related with the sale, purchase and construction on Cyprus. Our experts have a lot of experience in this area and will do everything possible to ensure the most profitable transaction to the client.
Real estate on Cyprus is not subject to the inheritance tax.
Annual real estate tax
Since the beginning of 2017, the annual real estate tax has been completely abolished.