Rental tax

General questions & discussions on Cyprus property related matters
Post Reply
burnt4head
Posts: 6
Joined: 21 Oct 2010 20:47

Rental tax

Post by burnt4head »

Hi all
My rental agent has just informed me by email that I owe €1400 rental tax on my house that I've let out long term to a couple,
The gross rent is approx €12000 a year and once all the deductions are taken off, pool, gardener, agent fees etc I haven't enough left over to cover the mortgage, surely tax is only for profits ?
Any advice would be great, I'm waiting back for an answer from my agent,

Scott
JMot
Posts: 14
Joined: 03 Dec 2020 15:56

Re: Rental tax

Post by JMot »

a) Are you a tax resident in Cyprus or non-resident?
b) If you are resident and domiciled in Cyprus, is rental income the only income you have worldwide?
c) If you are resident but non domiciled in Cyprus, is rental income the only income you have in Cyprus?

Without answering these 3 questions it is very difficult to offer any answer.
burnt4head
Posts: 6
Joined: 21 Oct 2010 20:47

Re: Rental tax

Post by burnt4head »

Hi
I'm non resident, bought the house in 2009
Pantheman
Posts: 807
Joined: 26 Jan 2008 14:44
Location: Famagusta District
Contact:

Re: Rental tax

Post by Pantheman »

JMot wrote: 24 May 2022 16:04 a) Are you a tax resident in Cyprus or non-resident?
b) If you are resident and domiciled in Cyprus, is rental income the only income you have worldwide?
c) If you are resident but non domiciled in Cyprus, is rental income the only income you have in Cyprus?

Without answering these 3 questions it is very difficult to offer any answer.
You are confusing rental tax with income tax. Sure if he is a tax payer in Cyprus the rental income plays a part, but rental tax is different.

On you annual rental income you are allowed 20% deduction then charged at 3%.

In addition to this, you would normally also pay Gesy (the national health service) contribution, but I'm not sure if you have to pay this if you don't live here.

The rental tax is paid monthly usually or if annually you pay some small penalty.

If you don't pay this, you will end up paying it when you have sold up some time down the line.

The fact that you have other expenses, agents, pools mortgage etc is of no concern to the government.

For what period is the €1400 taxes for??

Good luck.
For all your property needs, we offer Trust, Integrity, Honesty.
FSB Properties Ltd
Registered and Licensed Real Estate Company. Reg. No. 1145, Lic. No. 572/E
Member of ETEK Registration No. A201999
https://www.fsbproperties.com
Nigel Howarth
Site Admin
Posts: 2911
Joined: 24 Oct 2007 14:38
Location: Erimi, Limassol, Cyprus
Contact:

Re: Rental tax

Post by Nigel Howarth »

Hi Scott

Rental tax is calculated on the gross income less allowable expenses.

Regards,
Nigel Howarth
Independent information & advice for Cyprus property buyers
Contact Nigel Howarth
Read the latest Cyprus property news
JMot
Posts: 14
Joined: 03 Dec 2020 15:56

Re: Rental tax

Post by JMot »

Pantheman wrote: 25 May 2022 08:58
JMot wrote: 24 May 2022 16:04 a) Are you a tax resident in Cyprus or non-resident?
b) If you are resident and domiciled in Cyprus, is rental income the only income you have worldwide?
c) If you are resident but non domiciled in Cyprus, is rental income the only income you have in Cyprus?

Without answering these 3 questions it is very difficult to offer any answer.
You are confusing rental tax with income tax. Sure if he is a tax payer in Cyprus the rental income plays a part, but rental tax is different.

On you annual rental income you are allowed 20% deduction then charged at 3%.

In addition to this, you would normally also pay Gesy (the national health service) contribution, but I'm not sure if you have to pay this if you don't live here.

The rental tax is paid monthly usually or if annually you pay some small penalty.

If you don't pay this, you will end up paying it when you have sold up some time down the line.

The fact that you have other expenses, agents, pools mortgage etc is of no concern to the government.

For what period is the €1400 taxes for??

Good luck.
I am not confusing anything and the questions are very pertinent (the OP in his first post was not specifying his tax residency status). I asked the questions because being the OP a non-resident landlord the tax due changes substantially w.r.t. a resident one (and even a domiciled status affects the tax):
https://www2.deloitte.com/content/dam/D ... _NoExp.pdf

You are calculating the SDC tax wrongly for the OP (who is very likely exempt from SDC):
SDC is applicable on the gross rent amount (no deductions available) at the effective tax rate of 2,25% (=75% x 3%).
SDC is only payable by Cyprus tax residents that are also Cyprus domiciled. Cyprus tax residents that are non-Cyprus domiciled are
exempt from SDC.

Cyprus Income tax: again the OP is probably exempt on 14k eur income per year due to being below the 19500 eur annual threshold, unless the OP has other income sources in Cyprus that will cumulate:
https://home.kpmg/xx/en/home/insights/2 ... rders.html

The OP being non resident is also excluded from the Contributions to the General Healthcare System (GHSC) (Gesy)

The OP will have to be concerned with Revenue registraction and obtaining a TIC as a foreign resident. My suggestion is for the OP to present an annual tax return even if the income is below the threshold so that the OP will have a track record of declared income when selling the property, so that the OP will have all the documentation necessary to get the clearance for the sale (but I am not sure about this last point)

Stamp Duty a contract of 14k eur per year would be 0.15%. https://www.mof.gov.cy/mof/tax/taxdep.n ... endocument

I STRONGLY SUGGEST THE OP to contact a certified public accountant in Cyprus to verify all the items above.

The other concern of the OP should be in his residency country w.r.t. tax rules for foreign rental income.

Regards
burnt4head
Posts: 6
Joined: 21 Oct 2010 20:47

Re: Rental tax

Post by burnt4head »

Ok, I'm getting conflicting answers regarding offsetting expenses against this charge between Pantheman and Nigel ??
JMot what is SDC ?

I've been given a fax number by Cyprus life to contact the authorities, a FAX NUMBER !!!
JMot
Posts: 14
Joined: 03 Dec 2020 15:56

Re: Rental tax

Post by JMot »

burnt4head wrote: 26 May 2022 00:18 Ok, I'm getting conflicting answers regarding offsetting expenses against this charge between Pantheman and Nigel ??
JMot what is SDC ?

I've been given a fax number by Cyprus life to contact the authorities, a FAX NUMBER !!!
I quoted you a 2022 document from Deloitte, one of the big four accounting firms in the world. Do you trust more an answer (even mine) in a forum or the advice of one of the biggest accounting firms in Cyprus? Good luck contacting the tax authorities in Cyprus, they are lazy even when you go to their office in person. Please follow my advice and contact a decent certified public accountant in Cyprus for tax advice. I am a landlord in Limassol and I use the services of a certified public accountant.

SDC is the special defense contribution https://www.mondaq.com/cyprus/tax-autho ... r-defense-, it is what Pantheman calls the "rental tax", there is no such named tax in Cyprus, it is called SDC and it is only charged to domiciled resident landlords. A resident landlord is subject to FOUR TAXES on rental income in Cyprus: Income Tax, SDC, GHSC and Stamp Duty on lease contracts with an annual value above 5000 eur. A non resident landlord has some exemptions. Your residency status, how to prove it and the tax exemptions should be verified with a Cyprus certified accountant of your choice.

If your estate agent receives the rent from your tenants and then pays the rent to you, he/she might have some tax obligations to withold SDC and GHSC tax at source and then declare these taxes through Taxisnet and pay them through JCC Smart. However given your special non resident status (to be verified), he/she should not do this and having a certified accountant talking with your estate agent might help the issue.

This it the maximum I can help, only a certified public accountant can provide you the right tailored advice based on the full disclosure of your facts.
Post Reply