Owners of rental property in Cyprus, who are non-resident, are liable to pay taxes in Cyprus if their income exceed € 19.500. An Individual is considered as non-resident in Cyprus if s/he does not spend 183 days or more in any tax year (calendar year) in Cyprus or does not have their primary residence there.
Cypriot taxes payable when owing a property are as follows:
Income Tax:
Cypriot Tax Resident: Rents from Cyprus source or outside Cyprus are subject to income tax.
Non-resident: Rents from Cyprus only are subject to income tax.
In either case the individual is entitled to the following yearly allowances: a) A reduction of 20% on the gross rent. b) A deduction for the total interest paid for the acquisition of the property rented. c) Capital allowances of 3% on the cost of the rented property (for 33 years from the date of purchase).
The following income tax rates apply to individuals:
Chargeable income (€)
Tax Rate (%)
Accumulated tax (€)
0 – 19.500
-
0
19.501 – 28.000
20
1.700
28.001 – 36.300
25
3.775
over 36.301
30
Special Defence Contribution
Cypriot Tax Resident: Gross Rents from Cypriot sources or outside Cyprus, after being reduced by 25% are subject to a special defence contribution of 3%.
Non-resident: Not liable to special defence contribution.
The special defence contribution is payable by the recipient of the rent in two installments on the 30th June and the 31st December each year.
Cypriot Corporate Income Tax
Cypriot Corporate Income Tax is payable if property is purchased through a company and is calculated @ 10% on the company profits after costs.
Cypriot Immovable Property Tax
The annual Cypriot immovable property tax is imposed on the market value of the property as at 1st January 1980 and applies to the immovable property owned by the taxpayer on 1st January each year.
Market value of property (1/1/1980)(€)
Annual Property tax (%)
up to 170.860
0
170.860 to 427.150
0.25
427.151 to 854.300
0,35
over 854.301
0.40
Cypriot Capital Gain Tax
Cypriot Capital Gains Tax is payable by both residents and non-residents at a rate of 20 per cent on gains from the disposal of immovable property in Cyprus.
Subject to certain conditions, individuals may claim the following deductions:
Up to €85,430 if the disposal relates to a private residence.
Up to €25,629 if the disposal is made by a farmer and it relates to agricultural land.
Up to €17,086 on any other disposal.
These deductions are granted once in the lifetime of the individual, until fully exhausted and if an individual claims a combination of them, the maximum deduction granted cannot exceed €85,430.
Stamp Duty on Contracts The purchaser is liable for the payment of stamp duty on the purchase price of the property at the following rates
Contracts:
For amounts up to € 170.860 0, 15%
For amounts over € 170.860 0, 20%
Plus € 256, 29
(Maximum Fee € 17.086)
This should be paid within 30 days from signing of the contract of sale.
Transfer Fees
Real Estate Transfer fees are imposed by the Lands Registry in order to transfer FREEHOLD ownership to the name of the purchaser. The transfer fees are due for payment when the transfer of the title deed in the name of the purchaser takes place. The Purchaser is solely responsible for the payment of the transfer fees. The rates are on a graduated scale as follow:
Value of property (€)
Transfer fee rate (%)
up to 85.430
3
from 85.431 to 170.860
5
from 170.861 and over
8
If the property is in joint names e.g. of a couple (husband and wife) or two individuals, then the purchase value is divided into two parts which results in reduced transfer fees.
Property Tax International Ltd is part of The Taxback Group incorporating Taxback International and Taxback.com, which have been providing international tax advice since 1996
Cypriot Tax Services
