Property Transfer Fees are usually calculated on the market value of the property at the date of its purchase. However, in the situations where the contract of sale is not deposited with the District Office of Lands and Surveys, the property transfer fees will be calculated on the assessed value of the property on the date the transfer takes place.
A potential investor of real estate in Cyprus needs to be aware of the actual expenses usually payable by the purchaser as follows:
Calculating Property Transfer Fees
Property Transfer Fees are based on a sliding scale as follows:
- 3% – on the first € 85,430
- 5% – on the next € 85,430
- 8% – on the remainder amount
Property Transfer Fees are usually calculated on the market value of the property at the date of its purchase. However, in the situations where the contract of sale is not deposited with the District Office of Lands and Surveys, the property transfer fees will be calculated on the assessed value of the property on the date the transfer takes place. It is noted that the market value may not be the same as the actual purchase price of the property since the officials of the District Office of Lands and Surveys have discretion to assess the purchase price as reasonable or not.
As per newly introduced amendments to the legislation, the transfer fees for properties transferred until 31 December 2016 will be discounted by 50%. Furthermore, during this period, transfer fees will be imposed on transfers of immovable property from parents to children.
Calculating Stamp Duty
Stamp duty in Cyprus is levied on ‘documents’ (i.e. written agreements/contracts) relating to assets located in Cyprus and/or matters taking place in Cyprus. Stamp duty is calculated on the value of the agreement at 0.15% for amounts exceeding €5.000 up to €170.000, and at 0.2% thereafter with a maximum payable cap of €20.000 per stamped agreement.
The person legally liable to pay the stamp duty (unless otherwise stated in the agreement) is the purchaser. The stamp duty is payable within 30 days from the day of the ‘signing’ of a document which is considered to be subject to stamp duty when such document is signed within Cyprus. In the event where the deadline lapses without payment of stamp duty penalties are imposed. The related penalties are depended on the amount of the contract and the time lapsed but in general, it is estimated at 10% for the first 6 months and approximately double the 10% charge, following the lapse of the first 6 months. This means that the maximum exposure on top of the maximum stamp duty cap of €20.000 is an additional penalty of not more than €4.000.
Calculating Immovable Property Tax
As of 2015, the annual immovable property tax payable by property owners is based on the official values provided as at 2013 (as opposed to 1980 values used for previous years) and is calculated at the new rate of 1 per thousand (lower rate than previous years). The immovable property tax is payable by the 31st of December of each calendar year. No tax is payable if the immovable property tax due is up to €25. Every year, incentive discounts are announced to owners who pay earlier than the deadline.
Other amendments introduced to the legislation are the following:
Capital Gains Tax from sale of shares in property companies
The disposal of immovable property situated in Cyprus as well as the disposal of shares of a company that directly / indirectly (through layers of companies) owns immovable property situated in Cyprus are subject to Capital Gains Tax (CGT). An exemption applies where the value of the immovable property situated in Cyprus represents less than 50% of the value of the whole assets of the company.
Capital Gains Tax exemption
No Capital Gains Tax will be imposed on a future sale of immovable property situated in Cyprus if such property is purchased until the 31st December 2016. This exemption will be applicable regardless of the date any possible future sale takes place.
