If you are planning to buy property in Cyprus, you must be prepared for your new property maintenance expenses.
Let's see what awaits the new property owner, what to prepare for.
Cyprus property taxes
The first tax that the buyer pays is 19% VAT. Since 2012, the government has given a discount to those who buy island's property for the first time.
If the buyer:
- individual (not legal entity)
- buys Cyprus real estate for permanent residence
- buys property in Cyprus for the first time
- does not plan to arrange an office or garage in his home
then they can count on a reduced 5% VAT rate.
To receive this benefit, you need to collect the following documents:
- declaration that the applicant has no other property on the island
- contract of sale
- architectural project of the purchased property
- marriage certificate for married persons
- copy of passport
- copy of the spouse's passport
- building permit
- certificate of the size of residential property
- utility bill
It is important to keep in mind that this benefit can be received if the buyer purchases a new property and becomes its first owner. If you buy secondary housing, you don't pay VAT at all.
Please note, that everyone (who buys new real estate) has to pay 19% VAT, but for those who can get benefit, a recalculation will be made, and the difference between 19% and 5% will be refunded after submitting the package of documents.
The amount of the state duty depends on the cost of housing:
- 1.5% if the property value does not exceed € 170,000,
- if the value is higher, then +0.2% for all amounts above € 170,000 should be also paid.
2. After receiving permission from the Council of Ministers, the buyer needs to pay title deed.
The tax also depends on the housing value, and the more expensive the housing has higher rate:
- 3% if the value does not exceed € 85,000
- 5% if the value does not exceed € 170,000
- 8% if the value is above € 170,000
3. Also, the buyer has to pay for the services of a lawyer.
The services of an intermediary agent, as a rule, are free for the buyer, the realtor is paid by the real estate seller.
Cyprus Annual Property Tax
Until December 31, 2016, all property owners in Cyprus have paid property tax annually. Real estate of a value above € 300,000 were taxed at 1.3-1.7%, the owners of real estate which value was above € 3,000,000 paid 1.9% every year.
Since January 2017, the Cyprus government has canceled this tax as a temporary measure to attract buyers.
Keep all receipts
If you bought housing and later made repairs, don't get rid of the receipts. When you sell your property (sooner or later some of the owners decide to sell their housing to buy something new), you will have to pay more taxes. And you can pay less taxes if you show how much you spent on buying and repairing your real estate.
How much to pay?
Capital gains tax is 20% of the amount you earned. If you have documents confirming the fact of the repairs made, then the taxes should be less.
There are additional tax benefits. The ex owner does not pay capital gains tax if the housing value is below €117,000. In addition, if you lived in your real estate at least for 5 years, €85,000 profits are not taxed.
For example, in 2015 you bought an apartment for €117,000, and in 2020 you sold it for €222,000, your profit was €105,000. In addition, you made repairs in your house in the amount of €20,000, and you saved receipts. Thus, your income tax is €0.
What other payments does the owner have?
Utility payments (read more here):
1. Water supply, water consumption is calculated over 4 months.
- If you consume up to 40 m3, then the cost per 1 m3 will be € 0.9.
- From 41 m3 to 80 m3 - € 1.43 / 1m3
- From 81 m3 to 120 m3 - € 2.45 / 1m3
- From 121 m3 - € 5/ 1m3
Also, the bill will include the cost of using the wastewater collection system. It is €0.6 for 1 m3 of used water.
If you have a large family, benefits are provided.
2. Electricity consumption is calculated for 2 months. The total cost is the sum of the flat rate and actual use.
- If you consume from 1-120 kW, then the fixed is € 2.3, and the tariff is € 0.1371 per kW.
- From 121-320 kW - fixed part is € 2.35, tariff is € 0.1453 per kW.
- From 321-500 kW - fixed part is € 3.8, tariff is € 0.1498 per kW.
- From 501-1000 kW - fixed part is € 5.8, tariff is € 0.1541 per kW.
- From 1000 kW - fixed part will be € 7.4, tariff is € 0.1558 per kW.
The current rates can be viewed on the website.
3. Waste Collection in Cyprus
Waste collection is paid once a year. Rates vary by municipality and service company. The approximate cost is €160/year.
4. A residential complex maintenance fee (common expenses) is added for apartment residents:
- pool cleaning
- garden care
- cleaning of the territory.
The prices for the residential complexes maintenance are different. On average it is around €50/month.
But there can also be expensive utility bills. For example, for the residential complex maintenance at Aphrodite Hills Golf Resort, €2,700/year is charged per villa/apartment.
It is important to note that utility bills can be minimized if you buy a detached villa/house or an apartment in an economy class apartment house.
Solar panels are also becoming more and more popular in Cyprus. The electricity received from solar panels is quite enough for the needs of the house, and some even have surpluses that can be sold to the state power company.
5. Gas in Cyprus
Of course, there is no centralized gas supply system, as we are used to. Residents of Cyprus who use gas stoves buy gas cylinders in stores. The cylinder costs € 10-20. One cylinder is enough for 2-3 months.
6. Internet and telephone in Cyprus
Communication tariffs are quite extensive. Each operator offers a huge variety. You can familiarize yourself with the tariffs and choose the appropriate one on the service providers websites:
CYTA - (link)
Primetel - (link)
Epic - (link)
Cablenet - (link)
7. Home and property insurance in Cyprus
Each homeowner decides if they need to get insurance against theft, fire, unforeseen situations, and so on. On average, to insure property against theft and fire in the amount of € 20,000 is €100-150 per year.
When purchasing property in Cyprus, you need to look at all the advantages and disadvantages of each option, whatever it is: a house, villa or apartment.
And if you buy a property to rent out, all payments for electricity, water consumption, waste disposal and the Internet fees fall on the shoulders of the tenant.
Thinking about buying property in Cyprus? DOM real estate agency specialists help you to find the best real estate for free.
Don't put off until tomorrow. Contact us today at the link.
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