Our property expert Richard Way has been doing some hefty research on the costs involved in buying a property in Cyprus, including purchase costs and ongoing taxes.
Purchase costs
As in the UK, Cyprus does not use a notarized system for the transfer of property ownership, so there are no notary fees incurred. Transfer tax is banned for a resale property, the maximum rate is eight percent for anything over €170,000, but right now it’s discounted.
“Transfer tax would normally be approximately €21,200 for a €350,000 property,” said Esme Palas at law firm Michael Kyprianou & Co. “However, current legislation in place means that the tax is reduced by 50 percent so in this instance it would be approximately €10,600.”
Buyers should note that in Cyprus the amount of transfer tax due is only confirmed on the day of the title transfer, as it is based on a valuation of the property by the land registry and not the actual purchase price (although typically these two match). Other costs for the purchase include independent legal fees of €4,165 (1 percent of purchase price, plus VAT), a stamp duty of €620, and land registration and other disbursements of €120. The total cost of purchasing a €350,000 resale property in Cyprus would be in the region of €365,505.
Ongoing ownership - taxes & fees
The good news is that the principal council tax in Cyprus, known as Immovable Property Tax (IPT) has been abolished for 2017. There are however municipality/community taxes, to cover other local services and these are based on a property’s 1980 value, meaning a budget of just €250-€350 a year should cover them, depending on location.
Properties within resorts or complexes will incur communal fees. “For a two-bedroom apartment in Paphos, budget €400-€600 a year, depending on facilities - more if you have a lift and gated entry,” said Scott Toulson at Sunshine Luxury Villas. At luxury Aphrodite Hills Resort, with its numerous facilities, including a golf course, spa, tennis academy and communal pools, expect to pay more. “Fees there are €1,500-€3,000 depending on the square meterage of your property,” added Mr Toulson.
Cost of living
Global consumer price website Numbeo.com rates consumer prices as 22 percent lower in Cyprus compared to the UK. Restaurant and grocery prices are 24 percent and 19.5 percent cheaper than the UK respectively, according to the website, which also shows utilities as 40 percent cheaper.
Nigel Howarth at agent Cyprus-Property-Buyers.com advises: “From my 15 years’ experience of living in Cyprus, the cost of living here is about 20 percent lower than in the UK. The costs of goods and services are below the EU average, although dairy products, in particular, are more expensive than the UK. The cost of utilities, such as water, electricity and sewerage services, are generally lower than in the UK. However, it is very easy to run up large electricity bills during the hot summer months if air conditioning units are left running throughout the day.”
Rental rules
Current Cypriot law says that only property classed as tourist accommodation by the planning authority in Cyprus can be let to holidaymakers. In addition, the owner should obtain a licence from the Cyprus Tourism Organisation (CTO), which will be granted on the condition your property meets certain health and safety standards. The CTO rules for rentals are strict but the government is looking into changing them. For non-residents, there are generous allowances and tax is not payable on the first €19,500 of rental income, after which the rate scales up from 20 percent. There is a double taxation treaty between Cyprus and the UK.
* There is no inheritance or gift tax in Cyprus
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