Cyprus Property Forum for Buyers, Sellers & Investors

Hi,

I have read other posts but I am still unclear.
Capital Gains Tax is 20%. What in Cyprus is defined as inherited land?
So how much is capital gains tax on inherited land. What does the following mean in terms of exemption:

'Gift to or between family members up to the 3rd degree of relationship.'

Thanks

jackk19 wrote:Hi,

I have read other posts but I am still unclear.
Capital Gains Tax is 20%. What in Cyprus is defined as inherited land?
So how much is capital gains tax on inherited land. What does the following mean in terms of exemption:

'Gift to or between family members up to the 3rd degree of relationship.'

Thanks

Inherited, where you don't buy and is left to you in a will of given to you as a gift. Capital gains tax is paid on a sale of a property. I am not aware of CGT being paid for a gifted property.

I think the quote you mention is for transfer fees.

Transfer fees are exempt to 1st degree relatives, parent to child, spouse to spouse.

Where did you get the quote from?

Thanks Pan,

I think I misunderstood the information. I am trying to sell some land. Therefore I would have to pay 20% CGT.
What is the 17k allowance based on. For example if I have sell this land then do I use up my allowance or can I carry it over for other land?

Hi jackk19

The lifetime allowance is €85,430.07 - so no, you would not use it up.

Regards

Nigel Howarth wrote:Hi jackk19

The lifetime allowance is €85,430.07 - so no, you would not use it up.

Regards

Nigel you have just demolished my theory.

The 85K allowance is a one off allowance for having lived in a property for 5 years or more. I didn't think it was to be used up over many sales.

The 17k, allowance is for sale of a house if you never lived in it for more than 5 years and believe the allowance for land is around the 25k mark.

My Aunty sold a plot left to her she sure as hell paid thet CGT. On the cy£150k sale price, she paid arounf cy£26k in CGT.

When you sell you first plot, you would be using up your allowance. You only get it once and once used thats it.

Good luck.

Thanks for the info. So the allowance is once depending on the sale price of the disposal.

So how do people lessen their CGT dramatically?

I found this on the web.

'1. DO you want to buy as many properties as you want and avoid paying 20% Capital Gains Tax?
If the answer is YES then you need to know that by forming a company to buy property and incorporating it as Development Company in Cyprus to avoid paying 20% Capital Gains Tax. Through a Development company you can buy as many properties as you WISH for any purpose. When you decide to sell those properties, you will not pay 20% Capital Gains Tax on the profit but only 10% corporation tax on the gain.'

Then it goes on to how you can register a company etc.

Pantheman wrote:Nigel you have just demolished my theory.

I believe that each time you sell a property, whatever Capital Gains Tax allowance you are granted is deducted from €85,430.07.

Eg. If you get an allowance of (say) €20,000 when you sell your first house, that amount is deducted from your €85,430.07 lifetime allowance, leaving you with a balance of €65,430.07. If you sell you second house and get an allowance of (say) €30,000, that amount is deducted from the remainder of your lifetime allowance (€65,430.07), leaving you with a balance of €35,430.07 - and so it goes on. Once you have exhausted your lifetime allowance, you cannot claim any more.

I believe that farmers get an allowance of up to €25,629 if the disposal is related to agricultural land.

The €17,086 deduction rises rises to €85,430 if the property has been the main residence of the tax payer for a minimum period of five years. To take advantage of the full allowance, the land on which the house is built must not exceed 1,500m2. If it exceeds this size, you will pay tax on the percentage over 1,500m2.

Regards,

jackk19 wrote:So how do people lessen their CGT dramatically?

You can set up a company to purchase the property.

This would not apply to you because in order for a company to purchase your land, you would need to sell it to that company (and would therefore incur a Capital Gains Tax liability on its disposal).

Regards,

Ok fair enough, but there is one thing that I think does not make CGT as clear cut as 20% on any gain. It is the following that I keep reading but cannot actually work out an example to see how relevant it is:

'The gain is the difference between the cost price adjusted by the increase in the prices index up until the date of sale, and the sale price.'

You can find the table used when calculating the indexation allowance at http://www.mof.gov.cy/mof/ird/ird.nsf/A ... lation.pdf

And there is an article on the subject by a professor of law at http://www.news.cyprus-property-buyers. ... 2/id=00673

Regards,

jackk19 wrote: So how do people lessen their CGT dramatically?

Take cash under the table

Hi,
I guess that is what some of the locals would do.

Back to the Inland Revenue table. Any idea how to use it?

http://www.mof.gov.cy/mof/ird/ird.nsf/A ... lation.pdf

Hi jackk19

The inflation allowance is (inflation index figure for month & year before disposal e.g. Nov 2010 figure is 220.17) 220.17 / (index figure month year of buying fro example Dec 2005 figure was 196.18)

220.17/196.18 = 1.1222856560301763686410439392395

So if your property was bought for 100,000 in Dec 2005 and you sold it in Dec 2010 the current price due to inflation is 100000 X 1.1222856560301763686410439392395 = 112,000 approx

So the inflation allowance is 12,000 which is roughly in line with 2.3% X the number of years you have the property X the purchase price gives you current price including the increase due to inflation.

Regards,

Additionally, you can also subtract the 1.1.80 value from the sale price, which gives you a further small saving depending on that value.

The 1.1.80 figure is listed on your title deed.

Nigel Howarth wrote:Hi jackk19

The lifetime allowance is €85,430.07 - so no, you would not use it up.

Regards

Nigel, this has been bugging me since.

If each person had a lifetime allowance, why then do they only get the 17k on their house sale if less than 5 years stay??

Unless you are saying they can get the 17k x number of times.

Have you a link to a site I can look up?? I just need to satify that curiosity.

Cheers

Pan