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Cyprus' Capital Gains Tax on profit from real estate

In Cyprus, capital gains tax is set at 20% of profit from the sale of real estate. This is, however, offset by allowances for the period of ownership, and the improvements made during this time.

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Cyprus' Capital Gains Tax Laws differ from those in the UK

 
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Information about Cyprus

While in the United Kingdom, the gain made on your main residence is exempt from tax, in Cyprus, capital gains tax is payable on the disposal of all immovable property.

However, if the home is your main residence, it is subject to certain allowances, depending on how long you’ve owned it, the improvements you’ve made. There are other ways of lowering your tax liability too, but more of that in a moment.

 

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Tax Glossary

In the Republic of Cyprus, the Capital Gains Tax Rate is set at 20%

The following tax allowances are made to individuals, subject to certain conditions:

If the disposal relates to a private residence (not a holiday home), it is subject to an allowance of €17,080 for each year it has been owned by the individual, up to a maximum of €85,400 (5 years).

It must be noted that this allowance extends to the sale of an individual's private home, and is available just once during his/her lifetime.

For a company based in Cyprus, Capital Gains Tax is payable at 20% on any realised capital gain. No exemptions are allowed for companies.

Please also note:

  • Residency is beyond the scope of this Law.
  • Any capital loss from the disposal of a property is carried forward to the next disposal.
  • Capital gains in respect of immovable properties outside the Republic are not within the law's scope
  • Gains accruing from the disposal of company shares listed in the recognized Stock Exchange are not subject to Capital Gains Tax.
 

For the purposes of our guide to capital gains tax in Cyprus, the following definitions apply:

Property:

(a) Immovable Property situated in the Republic of Cyprus
(b) shares of companies the property of which consists of immovable property situated in the Republic of Cyprus

Person: any individual

Disposal: the sale of a property or piece of land

Capital Gain: the profit from the disposal of the property by any person, and the portion thereof which is not subject to tax under Cyprus' Income Tax Laws

Profit: means the selling price less the cost of acquisition, the transfer fees, any interest paid for the acquisition of the property and the indexation allowance.

Shares: the portion(s) of individual ownership in a company, the property of which consists of real estate in the Republic of Cyprus

'Disposal' does not include any of the following:

  1. Transfer due to death.
  2. Gift to or between family members up to the 3rd degree of relationship.
  3. Exchange of property of equal values
  4. Gift to a family-owned company, of which the shareholders do not change for the 5 years following the gift.
  5. Transfer of property as part of a company restructuring or reorganisation.
  6. Charitable Donations
  7. Transfer to the Republic's Government

Capital Gains Tax Deductions can also be claimed for the rate of inflation during the period of ownership, for legal fees, transfer taxes, stamp duty, mortgage interest paid, and the cost of any improvements you've made to the home during your ownership.

And last, but by no means least: In the Republic of Cyprus, Capital Gains Tax declarations must be submitted to the Inland Revenue Department within one month from the date of disposal. All Capital Gains Tax is normally payable upon the submission of this declaration to the IRD, but in any case before the formal transfer of the property.

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Practical things to know about Cyprus' Capital Gains Tax and the Inland Revenue Department

We tell you what others don't.

Bear in mind that you're dealing with Cypriots, not British bureaucrats, and that consequently it is entirely possible for three different Inland Revenue Department officials to give you three different answers to the same question about Cypriot capital gains tax law. This is not an exaggeration; this has actually happened.

Always get professional help when dealing with the Inland Revenue Department

It's also possible to reduce your capital gains tax burden perfectly legally, if you know how to go about it. For instance, if you're selling your home fully furnished, or in the case of one of our previous clients, you happen to have an expensive portable jacuzzi included as part of the sale, make sure these are sold under a separate contract. Any non-permanent fixture, such as portable pools, demountable sheds, in fact, more or less anything which isn't nailed down, is not subject to capital gains tax, always providing of course that you're selling it on a separate agreement from your home.

Always try to cover as many tax-angles as you can when selling your home.

We don't just want to sell you a property.
We make sure you're safe, satisfied and informed.

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The friendly tax-climate is not the only thing bringing people to Aphrodite's Isle. A great many tourists and expatriates also come here for the Cyprus lifestyle. The island's welcoming atmosphere, its rich history, and above all else, the abundant sunshine and the many English-speaking natives, have long drawn visitors to these shores.

After all, let's face it a second; the fact that the vast majority of Cypriots speak English alone makes the Republic a natural choice if you're thinking of moving abroad.

But aside from the fact that moving to Cyprus, and living here, present their own challenges, there's an awful lot so see and do for such a small island.
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Disclaimer. Please note that the tax information given on this website is displayed for guidance purposes only. It does not replace the need for professional advice by a qualified accountant.. E&OE

 

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