23.08.2024
Selling property in Cyprus offers unique opportunities for owners, but requires a thorough understanding of all aspects of the transaction. Whether selling a private home, a holiday apartment or an investment property, it is important to consider local legal requirements and associated costs to avoid potential problems and unnecessary expenses.
Often sellers run into unexpected difficulties due to not factoring in all costs at the initial stage. This leads to unnecessary stress, delays in completion and a reduced final profit from the sale. This article looks at the main costs to consider when selling a property in Cyprus to ensure sellers are informed and help them avoid common mistakes.
Contents
The Importance of Understanding Costs
Understanding all financial aspects of the transaction allows the seller to plan the process more accurately and correctly calculate their net profit, which helps to obtain maximum income. In addition, involving experienced lawyers and experts protects the interests of sellers at all stages of the transaction and helps to avoid possible risks associated with poor advice or legal errors.
Main Costs When Selling Real Estate
Real estate agent commission
Agents in Cyprus typically charge between 3% and 5% of the property price. This includes marketing, arranging viewings and negotiating with potential buyers. Once a buyer has been found and an offer accepted, the process is handed over to the seller’s lawyer to finalise the transaction.
Legal expenses
Involving a professional lawyer early in the process helps avoid legal mistakes. Legal fees typically range from 1% to 1.5% of the property price and include work such as drafting contracts, dealing with government agencies, and completing the transaction in the Real Estate Registry.
Taxes and fees
Capital Gains Tax (CGT)
This tax is 20% of the profit received from the sale of the property. To calculate the profit, the original purchase price is deducted from the final price. Indexation is also applied to account for inflation.
CGT relief
Sellers can benefit from tax incentives of €17,086 if it is the first sale of a property in Cyprus and up to €85,000 if the property has been used as a primary residential property for at least 5 years.
Additional deductions
Some expenses, such as agent commissions, mortgage interest, and legal fees, are tax deductible. Capital improvements, such as building a pool or garage, may also be deductible if documented.
New tax 0.4%
A new tax of 0.4% of the sale price has been introduced from November 2022. This tax is aimed at supporting Cypriot refugees who lost their homes after the Turkish invasion.
Property tax
Although the annual property tax was eliminated in 2017, sellers may be required to pay it for 2014-2016 if it was not paid earlier.
Other expenses
Additional costs may include fees for documents such as register extracts, energy efficiency certificates and building permits. You will also need to factor in any outstanding utility bills or mortgage debts.
To avoid unpleasant surprises related to the sale of real estate in Cyprus, it is important to carefully study all stages of the process and involve qualified specialists in a timely manner. This will help to significantly reduce risks and ensure the protection of the financial interests of the seller.
