Tax on property income in Cyprus
Taxation Researcher | September 20, 2021
Effective Tax Rate on Rental Income
|Click here to see a worked example|
Nonresident individuals are taxed only on income derived from Cyprus. Married couples are assessed and taxed separately.
Taxable income is generally the aggregate of all forms of income, less deductible expenses and personal deductions.
|TAXABLE INCOME, (€)||TAX RATE|
|Up to 19,500||0%|
|19,500 - 28,000||20% on band over €19,500|
|28,000 - 36,300||25% on band over €28,000|
|36,300 - 60,000||30% on all income over €36,300|
|Over 60,000||35% on all income over €60,000|
|Source: Global Property Guide|
Rental income is subject to income tax and a standard deduction of 20% of gross rental income is allowed to account for income-generating expenses. Taxable rental income is computed as gross rental income less 20% of gross rental income.
CAPITAL GAINS TAX
Capital gains from the sale of immovable property acquired after 1 January 1980 are subject to 20% tax. Taxable capital gain is computed as gross selling price less acquisition costs and improvement costs.
However, individuals can deduct lifetime exemptions from the capital gains, which is given only once per taxpayer during his lifetime. The deductible amount varies depending on the property seller and the property.
- An individual selling his private residence may deduct a lifetime exemption of €85,430, provided that the owner occupied it for at least 5 years.
- A farmer disposing or selling agricultural land may deduct a lifetime exemption of €25,629.
- Any other property disposal may deduct a lifetime exemption of €17,086.
The following disposals of immovable property are not subject to capital gains tax:
- Transfers of property arising on death
- Gifts made from parent to child or between husband and wife or between up to third degree relatives
Immovable Property Tax
Immovable property tax has been abolished as from 1 January 2017.
Real Estate Tax
Real estate tax is levied on the value of properties located in Cyprus. The base of the tax is the estimated market value of the property on 01 January 1980.
TAX ON IMMOVABLE PROPERTY
|TAXABLE VALUE (€)||TAX RATE|
|Up to €12,500||0%|
|€12,500 to €40,000||0.60% on band over €12,500|
|€40,000 - €120,000||0.80% on band over €40,000|
|€120,000 - €170,000||0.90% on band over €120,000|
|€170,000 - €300,000||1.10% on band over €170,000|
|€300,000 - €500,000||1.30% on band over €300,000|
|€500,000 - €800,000||1.50% on band over €500,000|
|€800,000 - €3,000,000||1.70% on band over €800,000|
|Over €3,000,000||1.90% on value over €3,000,000|
Real estate tax is payable by the end of September each year and it is not deductible for income tax purposes.
Corporate income in Cyprus is taxed at 12.5%. Expenses incurred in the production of income are deductible from gross corporate income.
Capital Gains Tax
The capital gains of a company are subject to 20% tax. Taxable gain is computed as gross selling price less acquisition costs and improvement costs. If the capital gains resulted from the disposal of property due to reorganization, the gains are not taxable.