Taxes on Buying Residential Property in Cyprus

Published On: 06/01/2025

Taxes on Buying Residential Property in Cyprus

When purchasing property in Cyprus, buyers are responsible for several taxes, depending on whether the property is new or resale:

  • VAT (Value Added Tax) for properties on the primary market (newly built).
  • Transfer Fee for properties on the secondary market (resale).
  • Stamp Duty on both primary and secondary market transactions.

VAT on New Properties

For newly built properties, the VAT is 19% of the purchase price, and it is usually included in the total price of the property.

However, the VAT can be reduced to 5% if:

  1. This is the buyer's first property purchase in Cyprus.
  2. The property will be used as a primary residence.

To qualify for the reduced rate, the property must:

  • Have a maximum area of 190 sq.m..
  • Be priced at €475,000 or less.

The reduced 5% VAT applies to the first 130 sq.m. of the property. The remaining area will be taxed at the standard 19% rate.

Example 1:

  • Apartment of 100 sq.m. costing €300,000: The entire purchase will be taxed at 5% VAT since it is within the size and price limits.

Example 2:

  • Villa of 180 sq.m. costing €500,000: The first 130 sq.m. will be taxed at 5%, and the remaining area will be taxed at 19%.

Example 3:

  • Studio of 60 sq.m. priced at €200,000: This property will be taxed fully at 5%, as both the size and price fall within the eligible limits.

If a buyer decides to sell the property or rent it out within 10 years, they must repay the difference between the reduced 5% VAT and the standard 19% VAT for the remaining years.

Transfer Fees for Resale Properties

For properties on the secondary market (resale), buyers are required to pay a Transfer Fee, which depends on the market value of the property:

  • 3% for properties up to €85,430.
  • 5% for properties between €85,431 and €170,860.
  • 8% for properties over €170,860.

Example 1:

  • If you purchase a property for €200,000, the transfer fee will be calculated as:
    • €85,430 x 3% + €85,430 x 5% + €29,140 x 8% = €8,262.4.

Example 2:

  • For a property valued at €600,000, the transfer fee will be:
    • €85,430 x 3% + €85,430 x 5% + €429,140 x 8% = €32,700.

Stamp Duty

Stamp duty is paid when the sales agreement is submitted to the Land Registry. The rates are as follows:

  • 0.15% for properties up to €171,000.
  • 0.20% for properties above €171,000.

Example:

  • If you purchase a property for €750,000, the stamp duty is calculated as:
    • €5,000 x 0% + €165,000 x 0.15% + €580,000 x 0.2% = €1,407.50.

Capital Gains Tax on Property Sales

When selling property in Cyprus, if you make a profit (selling at a higher price than you purchased), the capital gains tax is 20% on the profit. However, the first €17,068 of profit is tax-exempt.

Example:

  • If you bought a property for €300,000 and sold it for €350,000, the profit is €50,000. However, if you spent €10,000 on upgrades and €28,000 on realtor fees, you can deduct these from the profit. The taxable amount would then be €12,000, which is below the tax-exempt threshold, meaning no capital gains tax is owed.

Inheritance and Gift Tax

There is no inheritance tax in Cyprus. However, a transfer fee of 3% to 8% based on the market value is applied when transferring ownership through inheritance or a gift.

For gifts, the following rates apply:

  • 0% for gifts from parents to children.
  • 0.1% for gifts between spouses or close relatives.
  • A flat fee of €50 for gifts to trustees.

Understanding these taxes helps in better planning for buying or selling property in Cyprus.