Property Ownership Costs | Inheritance Issues

 

Overview:
An EU National resident in Cyprus is allowed to buy as much property in Cyprus without restrictions and does not need to obtain approval from any authority. EU Nationals who are not resident in Cyprus are permitted to buy as much land as they wish but are restricted to purchase one house or one apartment for which approval from the Council of Ministers is required.

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 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.

Immovable Property Tax
Immovable Property Tax (IPT) is an annual tax payable by all property owners in Cyprus, irrespective of their residence status. If you buy a property for which there’s no separate title deed (e.g. a house in a new development), you may have to pay IPT (to the developer, although you can usually reclaim it from the Inland Revenue when your title deed is issued.

The registered owner of the whole plot (the developer) must pay IPT and will charge you the relevant portion of what he has paid. However, provided the estimated value of your property on 1st January 1980 is below CY£100,000 (€170,000) which is almost always the case, you can reclaim the tax.

Other property costs

Cost of Living:
The cost of living in Cyprus is ultimately lower compared to the United Kingdom although the difference is not that great. There are a number of taxation benefits provided to citizens but homeowners generally have to spend around €100 every year for council tax and another €150 for refuse tax. 

Food and drink costs
Food and drinks bought from shops instead of eating out in restaurants can be much cheaper. Cyprus is dependent on imported food products since there is a shortage in agricultural stock and natural resources. A resident should expect to spend around 100 euro every week for grocery items and beverages.

Overall, the country has a wide variety of fruits, vegetables, meat and fish primarily intended for self-use. Wines and beers are also available locally and there are imported brands that cost more.

Coffee, tea, brandy and Cypriot wine are highly popular and are mainly used for export. These are available at very affordable prices. Cheese products are one food category that seems to be in excess.

Locals and households sell homemade cheese, yogurt and salad dressing, which may explain the surplus. Vegetables and herbs in Cyprus also have relatively large sizes. Potatoes, celery, radish, parsley and coriander are produced and sold at cheap prices. Meat products are affordable if bought at the right places but seafood can be especially expensive.

Clothing and accessories
British expatriates will find Cyprus’ prices on clothes and accessories cheap. There are various shops ranging from flea markets to department stores to private labels. Shoes are cheap in Cyprus but jewelry is more or less the same as in the UK.

Locally made clothes and shoes are prevalent and of very good quality. The clothing industry is one of the main financial supporters of the country and each year, several items and accessories are exported. A number of clothing and footwear companies are affiliated with Western brands and designers.

Nylon and silk are the common textiles so these are available at very low prices. In terms of modern fashion, Cypriots usually follow British trends. There are several shops based in the UK that provide new styles and designs. These are usually sold after fashion shows and designer debuts. In terms of traditional clothing, people can buy cheap local goods in different bargain spots and shops. Traditional types of clothing and accessories are abundant and can be bought wholesale.

Housing
UK Expats prefer long-term rental instead of buying properties immediately. Housing in big cities can be quite difficult to find but there are a number of available alternatives like home exchange. Many Cypriots would be willing to do home exchange even for a number of years while others would agree to permanently exchange residences provided with ample monetary compensation and documentation.

In recent years, the cost of housing has increased by almost 20%. Old homes in villages are priced at around €30,000, large independent villas are priced at around €125,000 and downtown apartments are priced at around €35,000.

In coastal areas and major cities like Paphos, rates can be higher. Transfer fees, property tax and mortgages will add an extra 10% to total costs. A number of locals invest so much in real estate since it is very marketable at the moment. Buying a house and lot from a local can be resold at twice or thrice as much to a foreigner.

Services
Due to the hefty costs of council tax and other housing expenses, the Cyprus government provides benefits when it comes to home maintenance and land passes. Health care benefits are reminiscent to the NHS in UK. Medical and rehabilitation services are subsidized by the government. Medication and pharmaceuticals however, are limited depending on the individual’s status and request.

In terms of communication, Cyprus is doing well in providing excellent postal service as well as Internet and telephone connectivity. Property and real estate services are some of the main thrusts of the government since citizens (especially traditional ones) are very conservative when it comes to their property. Most houses and lots have been passed on from generation to generation and residents only wish to maintain home ownership and the good condition of their property.

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