Overview:
People buying property in Cyprus will have to bear the following costs:

Transfer taxes
This is necessary in order to transfer FREEHOLD ownership to your name, and is due when the property is registered in your name at the Land Registry Office. This process is completed after the Council of Ministers approval.

Transfers of real estate are subject to transfer fees calculated on the market value of the real estate as estimated by the Land Registry department.  Transfer tax on the value of Cypriot real estate up to CYP 100,000 is calculated as follows:

Market Value (Euros)
€1 - €50,000
Rate = 3%
€50,001 - €100,000
Rate = 5%

Transfer tax on the value of Cypriot real estate in excess of €170,000 is charged at 8%.

Should the property be bought by a couple, the rate is split in two.

Example: A property worth €200,000

• The first €100,000: The wife will have to pay tax at 3% on €50,000 of that, as will the husband.
• On the second €100,000, the wife & husband will both pay 5% on each sum of €50,000.
• The registered owner of the property is liable for this annual tax & it is based upon the value of his property.

Local taxes and rates
The registered owner of immovable property is subject to minor taxation under other laws, such as municipal or village regulations. These taxes vary according to the area, the size and the property and cover sewerage, refuse collection, street lights.  The charges range in total from €200 to €300 per annum.

Capital Gains Tax
Capital gains tax is payable by both residents and non-residents at a rate of 20 per cent on gains from the disposal of immovable property in Cyprus.

If the property is a principal residence, there’s a lifetime (i.e. once only) exemption of CY£50,000 (€85,764). For any other kind of property (e.g. a holiday home), only CY£10,000 (€17,000) is exempt, and this exemption is per registered owner, not per property. (You cannot claim both of these exemptions!)
Other exemptions from capital gains tax include the following:

• Transfers due to death;
• Gifts to close relatives such as spouses or children;
• Gift to the government or a charity;
• Exchanges or sale in accordance with Agricultural Land Laws;
• Exchanges of properties where the value is equal.

If improvements or additions are made to the property, this will be deducted from the assumed profit, thereby reducing liability.

Value Added Tax (VAT)
Since 1 May 2004 there has been a Cyprus VAT charge of 15%.

Upon the sale of a property the buyer pays VAT at 15% when:

• The sale agreement provides that the property or part of the property and the associated
  land will be transferred to the buyer together.
  
• The property is going to be used for the first time i.e. is a new property

In the case where the property concerned will be the first private residence of the buyer, then the buyer can claim back from the Cyprus VAT authorities 10% of the VAT charge (i.e. effectively the buyer pays only 5% VAT).

IMPORTANT: Since January 1^st 2008, VAT has also applied to all land purchases.

The leasing of property is an exempt transaction and there is no VAT charge. The right to use a property is a taxable transaction as from 1 May 2004 and the VAT charge is 15%.

Stamp Duty
The purchaser is liable for the payment of stamp duty at the rate of 1.5 CYP (€2.50) per thousand up to the value of CYP 100,000 (V170, 000).  Thereafter, the rate is CYP 2.00 Pounds (€3.50) per thousand. This duty should be paid within 30 days of signing the contract.