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Frequently Asked Questions about Cyprus (Page 3)

Aphrodite presents you with a list of straight-talking answers to some commonly asked questions about tax in Cyprus, and property prices in the Republic, along with links to more information.

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Frequent questions about Cyprus, and property prices on the island

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Answers to common questions about Cypriot property prices, the government, and more

I want to rent out my property. How?

Technically, for non-residents purchasing a home in Cyprus, the current legal position is that such property may only be subsequently rented to residents of Cyprus on a long term basis.

However, since such a position is no longer legally supportable, nor enforcable, due to European laws being adopted across the Republic, this particular regulation has effectively been swept under the table, and rental agencies are now advertising many foreign-owned properties for rent on a holiday-let basis.

Then of course, there are a large number of holiday rental websites which will more than happily advertise your property in Cyprus.

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Are there tax advantages in Cyprus?

In a word: Yes

On the whole, tax in in Cyprus tends to be relatively painless when compared to the burdens put on taxpayers by the UK government.

For instance, foreign citizens residing in Cyprus are taxed at a rate of just 5% on all income from pensions and overseas investments (savings, stocks & shares, etc.). The first €3,400.00 of income derived from these sources is exempt from tax.

Furthermore, in Cyprus, income tax is also favourably structured for residents, and the rate of corporation tax runs at just 10%, making it not only an ideal country to retire or relocate to, but also an ideal corporate base.
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Property sales tax. How much is it?

Profits made from the sale of Cypriot Real Estate are subject to capital gains tax at a rate of 20%.

The seller is allowed to deduct the original purchase price, plus the underlying rate of inflation for the period of ownership. The cost of any additions or improvements made to the property may also be deducted from 'profit'.

Furthermore, if the property sold is the seller's primary residence in Cyprus, capital gains tax allowances are also available to offset the overall tax burden.
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What government does Cyprus have?

Cyprus is an independent republic with an elected president on a 5 year election cycle as head of state. Legislative power lies with the elected House of Representatives the government appointed Council of Ministers.

Cyprus is a member state of the European Union, the British Commonwealth and the United Nations. It is also a member of the World Bank and IMF (International Monetary Fund).

With all that said, since the last election in 2008, the Republic of Cyprus is also the only communist-run member state of the European Union.

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  How are Cyprus' property prices set?

This gets asked a lot, and 'Oh Boy' is it a complicated one to answer...

If you're truly looking for the answer to this question, you first have to understand a little about the history of the Cyprus property boom between 2000 and 2008.

Following a growing trickle of British buyers purchasing Cypriot holiday and retirement homes throughout the 1990s, the Republic was officially discovered by the overseas property market in about 2000. Until this time, a handful local development companies across the island had been steadily constructing homes primarily for Cypriot buyers. When overseas real estate companies suddenly started to bring over an increasing number of British people during 2000 and 2001, however, local builders began to realise that there were a great many Brits eager to purchase a dream home in Cyprus.

Fuelled by the fact that properties in Cyprus were quite frankly ridiculously cheap compared to those in the UK, the numbers of British homebuyers flocking to the island continued to swell during 2002. With the countdown to European Union membership ticking away, and British investors now arriving in large numbers, 2003 was the Year of the Property Developer in Cyprus, with new construction companies springing out of nowehere from coast to coast. It was also the year when the Republic's real estate market finally hit British TV, praised as 'The best kept investment secret in the Mediterranean'.

By the time the Republic officially became a full E.U. member on May 1st 2004, the demand for homes foreign buyers and investors had increased fifty-fold compared to just four years earlier. During this time, prices had of course been steadily rising, as Cypriot builders realised that Brits were willing to pay ever increasing amounts for what they were being told was a shrewd investment. Promises of yields between 20% and 25% growth per annum by large-scale British overseas property companies who were themselves charging 12% to 15% commissions from local builders brought in buyers, and further pushed Cypriot real estate prices ever higher.

Prices continued to spiral for the next few years, with large numbers of Johnny Come Lately development companies being formed by melon farmers, eager to jump on the housing bandwagon and grow rich. By the end of 2007, off-plan property prices in Cyprus had gotten out of control to the degree, that it was substantially cheaper in many cases to buy a resale home than a new one. Then, in 2008, the bottom fell out of the global economy, and the rest, as they say, is history.

The last two years have seen an awful lot of the newer development companies disappear, as those operators unable to adjust to the changing economic climate were swept away by the gales of financial instability. Left behind is a field of established construction companies which are established enough to weather the storm.

And so, with most of the cowboy builders and high-pressure real estate companies having gone bankrupt, property prices in Cyprus are once again stabilising, and returning to more sensible levels.

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What are Cyprus council tax rates like?

The Cypriot equivalent of Council Tax actually consists of three separate charges.

Local authorities levy an annual property tax, of about €35 to €50. Additionally, there is also a health tax, covering refuse collection 2 to 3 times weekly. This can range from €70 to €170 per annum, depending on the local authority. The third stage is a sewage tax of about €35 to €70 per annum.

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We tell you what others don't

The vast majority of Cyprus' property sales websites and estate agents will try to convince you that the Republic is a place of perfection, where life is easy, and nobody ever has a hard time.

Of course once you get past these absurd claims, you have to realise that the Republic of Cyprus is a real country, with real issues, a real native population, and its own particular quirks and bugbears. What's more, buying a property in Cyprus comes with its own things to watch for, so it's essential to get reputable legal representation.

Aphrodite tells you what others don't.
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Disclaimer. Please note that the information given on this website is displayed for guidance purposes only. It does not replace the need for professional advice, either legal or otherwise. E&OE

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