A. Taxes due upon the purchase of a property

(i) Transfer fees by the Department of Lands & Surveys:

The fees charges by the Department of Lands & Surveys to the acquirer of immovable property are determined in accordance with the following table:

However,

• No transfer fees are payable if VAT is imposed on the purchase of immovable property.

• The above transfer fees are reduced by 50% if VAT was not imposed on the purchase of the property.

In the case of transfer of property by donation, the transfer fees are calculated on the basis of the value of the property as follows:

• from parent to child - Nil

• between spouses - 0.1%

• between third degree relatives - 0.1%

• to trustee €50

The value of the property in the above cases relates to the value as at 1 January 2013.

Mortgage registration fees amount to 1% of market value.

In the case of reorganisations of companies, transfers of immovable property are not subject to transfer fees or mortgage registration fees.

(ii) Stamp duties

The stamp duty is paid within thirty days of signing a contract for buying a house in Cyprus. Stamp duties comprise 0,15% of the value of the contract of sale (excluding VAT) up to EUR 170.000 and 0,2% of the contract value above EUR 170.000. The first EUR 5.000 of the contract value is exempt from stamp duty payment.

Example: For the purchase of a property in the value of  EUR 500.000, the stamp duty is calculated as follows:

First 5.000 exempt + 165.000*0,15% + 330.000*0,2% = EUR 907,50

B. Taxes due on the disposal or transfer of immovable property 

(i) Capital gains tax

Capital Gains Tax (CGT) is imposed at a rate of 20% on profits from disposal (when the disposal is not subject to income tax) of an immovable property situated in Cyprus, including profits from the disposal of shares of companies which have such property. Also since December 17, 2015 the Capital Gains Tax is imposed on profits from the disposal of shares of companies that hold indirectly immovable property in Cyprus and at least 50% of the market value of these shares derives from the market value of the real estate. In the case of disposal of shares, only the part of the profit associated with real estate situated in Cyprus is subject to capital gains tax.

Disposal for the purposes of capital gains tax includes exchange, lease, donation, abandonment of rights of use, the granting of a right to purchase, and any amount received in respect of cancellation of a disposal of property.

Shares listed on any recognized Stock Exchange are excluded from the above provisions.

Exemptions

The following are not subject to property ownership:

• Land and land acquired from 16 July 2015 to 31 December 2016 are exempt from capital gains tax when they are sold in the future, subject to certain anti-avoidance provisions.

• Transfers due to death

• Donations between husband and wife, child to child, and between relatives up to third degree

• Donation to a company of which all shareholders are members of the donor's family and who, for a period of five years after donation, remain members of the donor's family

• Donation by a family company to its shareholders provided that the property donated was originally acquired by the company also by way of donation. This property must remain in the hands of the donor for at least three years

• Donation to philanthropic institutions or the Republic.

• Transfers as a result of a reorganization

• Exchange or disposal of immovable property on the basis of the Land and Agricultural Land (Consolidation) Laws

• Expropriations

• Exchange of properties to the extent that the profit made on the exchange has been used to purchase the new property. The profit that is taxable not is deducted from the cost of the new property, that is, the payment of the tax is deferred until the future disposal of the new property

Determination of capital gain

Capital gains tax is payable only on gains arising from 1 January 1980 onwards. The cost deducted from the gross proceeds of the sale of immovable property is the market value as at 1 January 1980 or the cost of acquiring the property (and improvements made) if incurred after 1 January 1980, as adjusted for inflation up to the date of the disposal. Inflation is calculated based on the official Retail Sale Index in Cyprus.

Expenses associated with the purchase and sale of immovable property are also deducted e.g. interest payable on relevant loans, transfer fees, lawyer's fees.

Exceptions

From the taxable profits made by natural persons the following are deducted:

(ii) Inheritance Tax

Immovable property in Cyprus is exempt from Inheritance tax.

C. Annual taxes

Annual Immovable Property Tax

Immovable property tax has been abolished as from 1 January 2017.