The Capital Gains Tax rate in Cyprus is 20% of the chargeable gain as adjusted for inflation, but certain lifetime exemptions apply to individuals for the disposal of their main residence. The first CYP10,000 of a gain is exempt. This exemption limit rises to CYP50,000 if the seller has lived in the property continuously for the previous five years. Further allowances are granted in relation to transfer fees, inflation and improvements made to the house, services of registered estate agents, but the total exemption cannot exceed a CYP50,000 limit. Capital Gains Tax does not apply to profits from the sale of overseas real estate by residents who were not resident when they purchased the asset.
Note that these are personal allowances. So if the property is owned in joint names, e.g. husband & wife, each owner is entitled to the exemption of CYP 10,000 or CYP 50,000.
Don’t forget that in addition to the personal CGT allowances you can also claim an Inflation Allowance.The indexation factor is based on the cost of the property if purchased after 01/01/80, using the Consumer Price Index (CPI) in the month preceding disposal and CPI in month of acquisition. Disposals of building sites use the 1980 valuation for CPI purposes.
The data is below.
Also you can deduct the following:
Allowable expenses:-
Land Transfer Fees
Stamp Duty
Estate Agent’s Commission - (but only if a licenced agent)
Professional Charges
Advertising
Capital Additions or Improvements - (receipts required and planning permission where necessary)
Indexation can be applied to the above expenses as well as the initial purchase price.
Additional allowable expenses:-
Immoveable Property Tax Interest on Loan used for the Acquisition of the Property
These expenses cannot be indexed.
If you’re selling a property partly/fully furnished there is a perfectly legal way to reduce your CGT liability.
Have two contracts; one for the sale of the property and the other for the furniture, etc (this is known as a furniture agreement).
For CGT purposes, the IR will only be interested in the gain you make from the sale of the property.
http://www.mof.gov.cy/mof/cystat/statistics.nsf/All/F799BCBF16A29708C2256D640042C313/$file/CPI-HISTORICAL%20DATA-EN-090106.xls?OpenElement
Avoid CGT in Cyprus
In Cyprus there is no taxation on the profits from the disposal of securities for individuals that are residents of Cyprus. “Securities” is defined as shares and other securities of companies or other legal persons, incorporated under the law in Cyprus or abroad and options thereon.
So to legitimately avoid all Cyprus CGT then you could purchase your property in Cyprus using a Limited Company registered in Cyprus.
But you will still have to pay UK CGT but the good news is that you can set off what you have paid in Cyprus. Finally the article tells you how to avoid paying Cyprus CGT all together.
John Mason is the owner and author of http://downtoearthcyprus.net. Down to Earth,Cyprus provides all you need to know about property purchase and finance in Cyprus.Your Definitive Guide to Buying Real Estate in the Republic of Cyprus.
You may freely distribute this article on condition that you keep this Author bio intact with an active link.
Article Source: ezinearticles.comThere is nothing better than first hand experience in providing an article to guide people through the potential pit falls of buying property in Cyprus. I have purchased through a large developer and commissioned a bespoke house to be constructed. What I certainly did not do was start off knowing the ropes. I had to learn - but not the hard way !! It is said that property purchasers often leave their brains at the airport - don't let it be you !!
The first thing is to make sure that the property or plot of land is what you want to meet your living needs whether for holiday use or permanent living on re-location. If you are buying to let or for investment then you also have to make a good study of the costs and likely returns.
In addition there will be laws and regulations to meet and comply with as well as taxes to pay both in the place you come from and Cyprus.
When buying off plan I went to see other properties that the developer had built and to talk to an owner or two. Then I pawed over the plans of the place that I wanted to buy and the overall development in the offices of the developer asking loads of questions making sure I knew the layout of the house and its gardens. And I also looked at the standard finishes from the samples in the office to make sure that I was not going to have to pay extra for something half decent.
Only then, several hours later, did I venture onto the site and having fully understood the plans put the location into context including the house in relation to other houses and the sun.
Next stage back to the office to negotiate a price including any extras or minor modifications to the property. Discounts are always available if you ask but don't expect to keep going back a few days or weeks later to nibble away at the price. Ask to see the contract and ask the developer's legal department to explain it all to you. Is there a penalty clause for later delivery? Can you cancel? Are there any legal costs if you wish to sell before the title deeds are issued? Does the property have planning permission and a building permit?
Then go and find yourself an independent local lawyer, who has no relationship with the developer,and is registered at the Cyprus Bar. Discuss his or her fees for the legal process of purchasing and then ask your lawyer to explain how the formal process works and how your interests will be protected in the period when you are paying the developer for the house until you get possession and the title deeds are eventually issued to you and you pay your Land Transfer Tax and Immovable Property Tax. Even though you may be an EU National you will still have to get permission to own a property in Cyprus unless you are already registered as a permanent resident of Cyprus. Do also ask your lawyer to help set up a bank account, a power of attorney for him to act for you and the supply of water and electricity by direct debit. It saves so much time and hastle later when you can't wait to move in.
Nothing much about money so far. How much will you pay as a non returnable deposit? Credit Card or Cash?
But do you need a local mortgage to pay the rest? Do you need a guarantee to the bank from your developer? What will it cost? What currency to borrow in? How long do you want a mortgage for? Medicals? Life Insurance? Evidence of Earnings? Copy of passport? A plethora of things to arrange before you fly home.
Stage payments. You don't want to pay for nothing so make sure you appoint a RICS qualified surveyor to check the construction out as you go and before each payment you make. They can also make sure that you are delivered an almost snag free property leaving very little to be covered by the final retention payment paid after possession.
Or will you be raising the funds against another property back home? How long will that take and how does it fit with the stage payment schedule?
So much to remember and not everything is written down in this article. But there is often a lot of help and advice at hand from others who have done it before you on the internet or in a local library back home.
Good Luck with buying a property in Cyprus - your dream home - enjoy.
John Mason is the owner and author of http://downtoearthcyprus.net Down to Earth,Cyprus provides all you need to know about property purchase and finance in Cyprus.A Free Guide to Buying Real Estate and Property in Cyprus.
You may freely distribute this article on condition that you keep this Author bio intact with an active link.
Article Source: ezinearticles.com|
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