The implementation of the Land Registry and Land Surveying Department (Fees and Rights) (Amendment No 2) Law has brought about significant changes in Cyprus regarding the reduction of transfer fees for immovable property. These changes, which came into effect on the 14th of July 2016, aim to attract new investors, both domestic and foreign, and stimulate the construction industry. Additionally, the law allows property buyers to obtain title deeds for their properties in Cyprus while either paying reduced transfer fees or no transfer fees at all.
Furthermore, it provides a zero capital gains tax for properties purchased up until 31st of December 2016.
Applicability of Law
The law applies to all cases where a contract of sale for a property was deposited at the relevant District Land Registry Office on or before 31st of December 2014. Buyers who failed to deposit their contract of sale can still benefit from the law of obtaining a court order allowing them to deposit their contract of sale at the appropriate District Land Registry Office. If a title deed has already been issued for a property, and the purchaser has fulfilled all payment obligations and other contractual obligations, the Land Registry Office will transfer the title deed to the purchase’s name, regardless for any existing mortgage or charge owed to the seller. For cases where a title deed has not been issued yet, but the purchaser has fully paid the price and fulfilled all obligations under the sale contract, the transfer of titled deeds can proceed, and an additional application can be filed to expedite the proceed of issuing separate transfer deeds. This applies even if there is a mortgage or other change on the property.
Purchasers who have paid VAT on the purchase price of their property in Cyprus will be exempt from paying transfer fees if the transfer takes place by the 31st of December 2016. The provisions for a 50% reduction in the transfer fees also apply to the new property purchases where the transfer of titled deed occurs before the 31st of December 2016.
Payment of transfer fees must be made within 60 days of receiving a notice to transfer the property. Paying within this period allows the purchaser to benefit from an additional 10% reduction on the transfer fees, in addition to the 50% reduction already provided, if paid before the 31st of December 2016. Alternatively, purchasers have the option to pay the transfer fees in 12 months instalments.
Transfer Fees Rates
The transfer fees are calculated based on the market value of the property at the time of transfer and are payable during the transfer process. The rate are as follows:
|Property Value||Transfer Fees Rate|
|EUR 0 – EUR 85,430.07||3%|
|EUR 85,430.08 – 170,860.14||5%|
|Over EUR 170,860.15||8%|
Properties purchased between the 2nd of December 2011 and 31st of December 2016, subject to VAT, are exempt from transfer fees mentioned above. Properties not subject to VAT are eligible for a 50% exemption from the transfer fees.
Capital Gains Tax (CGT)
The rate of CGT is 20% on profits acquired from sale of immovable property located in Cyprus after provision for an increase indexation payment. The capital gains acquired from the sale of the property located outside Cyprus is not subject to CGT.
The taxable gain is calculated difference between the sale price and the original cost of the immovable property located plus refurbishment cost after purchase. The total price of the immovable property must be adjusted to include the increase from the date of purchase which took place not earlier than 1st of January 1980, up to the date of disposal. This increase can be estimated via Cyprus consumer price index.
Any sale of immovable property in Cyprus purchased between the 16th of July 2015 and the 31st of December 2016 will be subject to a 0% capital gains tax.
The abovementioned measures and incentives provide favourable conditions for individuals interested in dealing with land property in Cyprus.
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