15% Property tax on sales

9 Replies

I am currently in UK but was seriously thinking of buying a 2 bed apartment in Cyprus in 2018 or 2019.However I have heard rumours of a 15% tax on the sale of all property.    Is there any truth to this ?  And if so when does it / did it come in ?Currently I would pay about 3% tax in purchasing a €100,000 euro apartment.   If 15% is imposed it will kill any chances of buying - unless I carry on working and saving for at least 18 months - and by then UK citizens will no longer be EU citizens - with all the added repercussions regarding immigration regulations.  No doubt after Brexit in March 2019 it will be much tougher for Brits to relocate to anywhere in the E.U.Is there any truth to this 15% property tax ??

Replies

John Costello 1521043674

( Once again good ol Angloinfo have screwed the formatting and crammed all my text together.  Apologies on their behalf. )

Nigel Howarth 1521096857

There isn't a 15% tax on the sale of property, but there is Capital Gains Tax to pay when you sell a property at a rate of 20% (which is adjusted for inflation) plus a number of other allowances.

When you purchase a property there are Property Transfer Fees to pay - the local equivalent of the Stamp Duty Land Tax (SDLT) that a purchaser pays in the UK when a property. You can see what this is likely to cost by using this on-line calculator.

There is also stamp duty to pay on the contract.

You can find details of all these taxes in a handy booklet published by PwC - Tax Facts & Figures 2018 - Cyprus.

BTW - it looks as if you're using line feeds rather than paragraph breaks - hence the cramming of text

Regards

Nigel



John Costello 1521153897

I have found out that there IS a 15% VAT on property sales - but it only applies to NEW builds (and not resales).


So it seems that the Cyprus government is discouraging new building.  As a shortage of new builds begins to take effect - or buyers shun new builds, demand will push up property values.   Builders, plumbers and plasterers will have a hard time.


There is currently a 50% reduction on property transfer fees, it varies on the price of the property but on average it will be 1.5% instead of 3%.   I have no idea when the reduction ends...   ...anyone know ?

Nigel Howarth 1521185047

John - the 15% VAT is on the purchase of a new new build not the sale. As I stated earlier you are liable for Capital Gains Tax when you sell a property.

If you pay VAT when you buy you will not pay Property Transfer Fees. If you buy a resale property then the Property Transfer Fees are reduced by 50%.

(I gave you a link to the on-line calculator in my earlier reply.)

The reduction in Property Transfer Fees was made permanent in July 2016.

The government isn't discouraging new builds. Last year permits were issued for the construction of 4,939 dwellings, up more than 35% on the previous year.

Many people are avoiding buying off plan/new builds because of the long-standing issues with getting Title Deeds.

Regards

Nigel


Nigel Howarth 1521185308

John - VAT is 19% not 15% as I stated just now.


John Costello 1521195558

Nigel this is a response I had from a Cyprus estate agent....



" The transfers fees are actually being discounted by 50%, so you will only pay 1.5%.

 

The 15% you refer to is VAT on new builds only, not on resale properties.

 

If you could come back to me and let me know if you would like to view this property, it would be greatly appreciated?

 

Are you planning on visiting Cyprus in the near future?

 

Thanks in advance

Regards.... "



So the VAT applicable seems to be 15% (not 19%)



















I have no reliable information on whether the purchaser or the seller pays it.    The estate agent doesn’t say.    So for now I will take your word for it that the purchaser pays it.  i.e  it is a tax on purchases.   

John Costello 1521195795

The government isn't discouraging new builds. Last year permits were issued for the construction of 4,939 dwellings, up more than 35% on the previous year. "

Then with a 15% levy on the purchase of new builds there will be a big surplus of unsold new builds....and a shortage of resales 

Nigel Howarth 1521281536

John - I published an article in January detailing the various property related taxes. You can find it at Cyprus property taxes in 2018.

The Property Transfer Fees are charged at:

The first €85,000 - 3%

€85,001 - €170,000 - 5%

Over €170,000 - 8%

But note that:

(a) No Property Transfer Fees are payable If VAT was paid on the purchase price of the property.

(b) Property Transfer Fees are reduced by 50% if VAT was not paid on the purchase price of the property.

If you buy a resale property your Transfer Fees will be reduced by 50% (as resale properties are not subject to VAT)

If you buy a new build you will be exempted from paying Property Transfer Fees (as you will have to pay VAT at the rate of 19%)

You can find an on-line Property Transfer Fee calculator at http://portal.dls.moi.gov.cy/en-us/Pages/CalculateTransferFees.aspx

There are plenty of resales around - but some agents work for the developers and will try and sell you a new property built by that developer.

If you're using an agent, use one that's registered as there are many cowboys around.

Regards

Nigel


Nigel Howarth 1521281835

One further thing John,

If you intend to live in Cyprus permanently the VAT on a new is reduced to 5%.

You can find further details on this Information Leaflet from the Tax Department. (which also confirms that the 'normal' VAT rate is 19%.)

Regards

NIgel


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