Cyprus Features of real estate taxation
The acquisition of real estate in Cyprus is in demand among foreign citizens who are absolutely not afraid of the high cost of housing. Prices, on the contrary, attract potential buyers who want to buy an apartment, apartment or house in a country where there is no crime, a favorable climate, beautiful nature, quality of life and excellent business development opportunities. But foreigners who buy studios, apartments, villas, apartments in residential complexes must, before concluding a transaction, study the specifics of the tax payment system.
Types of taxes
When buying property in Cyprus, foreign citizens are subject to local tax laws, according to which the following types of fees must be paid:
A one-time payment when the registration of property rights takes place.
Special stamp duty (payable once).
Property tax that the owner of a particular type of housing will have to pay every year.
Fees at the conclusion of a purchase transaction
At the time of conclusion of the contract on the purchase of housing, all foreigners should be prepared for the fact that any transaction is taxed. This is due to the fact that the right to own property must pass from one owner to another. This type of fee must be transferred to a special Land Department. Payment is necessary when the mutual settlements between the new and former owners are completed, and the municipal authorities allowed the transfer of ownership from one person to another. The percentage of payments depends on the amount of the transaction.
For example, for housing worth less than 85.4 thousand euros, you need to pay 3% tax on the purchase amount. Already 5% should be paid by the owner of the property who bought a villa or apartment in the range of 85-170.8 thousand euros, and 8% will be paid by the person who purchased a house or apartment worth more than 170.8 thousand. If the investor has invested more than 155 thousand euros, then a 3% tax is paid for the first 85.4 thousand, and the other part of the amount will already be taxed at 5%.
This type of tax has features that must be taken into account:
The contract can be drawn up for several buyers, so taxation will be divided proportionally between the number of owners.
If the property is just being commissioned, then a one-time payment will not be charged, only VAT.
The fee can be reduced by half if the object does not fall within the scope of the VAT.
Additionally, once a foreigner is obliged to pay stamp duty, which is paid to the budget of the country within a month after signing the contract. The size of the payment is determined by the cost of housing: the conclusion of an agreement in the amount of 171 thousand euros forces the owners to pay 0.15% at the tax rate, and more than the specified amount – increases to 0.2%.
In Cyprus, the purchase of new housing provides not only the right to own a beautiful house in a picturesque location, but also the obligation to make budgetary payments every year for the ownership of real estate. Such features are enshrined in law, which states that the tax rate directly depends on the amount of the object. The minimum tax is 0.8% and the maximum is 1.7%. If the housing and its maintenance during the year costs less than 40 thousand euros, then the owners pay only 0.6%.
The annual payments include value added tax, the rate of which is calculated based on the average price of housing in Cyprus. According to the law, VAT in the country is 19%, but if the area of a residential property ranges within 275 square meters. m, then it becomes possible to apply preferential tariffing. At the same time, only objects with an area of up to 200 square meters fall under the 5% rate. m, and the rest – at 19%.
In order to apply the rate of 5%, it is necessary that the foreigner owns only one property in Cyprus, has not previously submitted an application for the use of benefits, ownership transferred to the newly constructed property (should be the main one for future operation).
Foreign citizens pay a special municipal fee every year, which goes to the budget of a particular region. The average tax is almost 200 euros per property. But this is an unstable rate, since it depends on the size of the house, villa, apartment. The fee includes such payments as payment for garbage collection, street light, landscaping.
Both foreign buyers and residents can use them. For this, conditions must exist such as:
annual income less than 19.5 thousand euros. This type of income is not taxed;
if personal items are imported into the country, then you do not need to pay a fee when crossing the border.
Therefore, residents of the EU countries, for example, Bulgaria, Denmark, Belgium, as well as Egypt, China and Canada, when buying property in Cyprus have the opportunity to avoid having to pay taxes twice.