Capital Gains Tax revisited

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jackk19
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Capital Gains Tax revisited

Post by jackk19 » 10 Feb 2018 21:41

Hi
I asked this question a while back but am still unsure.

What are the rules around CGT. As in:
Can the 85k allowance be used for multiple sales until 85k is used up or just once? Is it used for land sales?
Is the 17k personal allowance related to the 85k or distinct?
If selling agricultural land, is 85k not used or not relevant to land but the 25k allowance used instead. Does it matter if you own the land but are not a farmer?
If one has sold residential land before how can I find out if any allowance was used?
Finally do all sales, land and property calculate CGT using the consumer index?

Thanks



Nigel Howarth
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Re: Capital Gains Tax revisited

Post by Nigel Howarth » 10 Feb 2018 23:09

Hi jackk19

I published a comprehensive article on Capital Gains Tax a few years ago. You can find it at Capital Gains Tax on the Sale of Property in Cyprus.

If anything's unclear, please get back to me.

Regards,


Nigel Howarth
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jackk19
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Re: Capital Gains Tax revisited

Post by jackk19 » 11 Feb 2018 01:05

Thanks Nigel

I am trying to sell agricultural land inherited that probably has an acquisition cost based on the market value as of 1.1.1980.

I am still unsure of allowance other than I don't think this qualifies for the 85k allowance. Could be 17k personal or 25k farm land.

What I would like to know is how to calculate the indexation and where I can find the tables.



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Re: Capital Gains Tax revisited

Post by Nigel Howarth » 11 Feb 2018 11:07

Hi jackk19

As it's agricultural land you'll get an allowance of €25,629.

You can find the Consumer Price Index tables at http://www.mof.gov.cy/mof/cystat/statis ... ub=4&sel=2

The one you should use is labelled "CONSUMER PRICE INDEX – TIMESERIES (BASE 1992, 2005, 2015)"

You'll find an online CGT calculator at http://www.ac-accountants.com/index.php ... calculator (but I can't say how accurate it is).

Regards,


Nigel Howarth
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Pantheman
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Re: Capital Gains Tax revisited

Post by Pantheman » 11 Feb 2018 21:48

Nigel Howarth wrote:
11 Feb 2018 11:07
Hi jackk19

As it's agricultural land you'll get an allowance of €25,629.

You can find the Consumer Price Index tables at http://www.mof.gov.cy/mof/cystat/statis ... ub=4&sel=2

The one you should use is labelled "CONSUMER PRICE INDEX – TIMESERIES (BASE 1992, 2005, 2015)"

You'll find an online CGT calculator at http://www.ac-accountants.com/index.php ... calculator (but I can't say how accurate it is).

Regards,
Nigel, my understanding is that the 25,629 euros is only for registered farmers. The 17,430 euro rule applies here.

As it is inherited land then the sale price is all gain. Minus the 1980 value, minus the allowance, minus the RPI for inflation then taxed at 20% on the rest.

The 85k is a one time allowance for your permanent residence os greater than 5 years not for land sales.

The base year for the RPI is 1980 to date.


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jackk19
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Re: Capital Gains Tax revisited

Post by jackk19 » 12 Feb 2018 15:21

Thanks Guys,

I had a feeling it may be just for Farmers?
Basically I am trying to figure out the cost to me so when I sell/negotiate a price I take that into consideration.

I have been trying to figure out indexation allowance but the table Nigel supplied does not go back as far as 1980. I have found some other inflation table but not sure if that is correct.

Anyone know how to contact Land Registry Nicosia. I may as well ask them some questions. For example I sold a building plot some 20 years ago and am not sure what allowance was stated then.

Is my personal allowance of 17k a one time only transaction?

Pan, I have seen your indexation allowance calculations on another post but I have also seen this one:
Purchase Price * (sale date index value/purchase date index value) - Purchase Price




Nigel Howarth
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Re: Capital Gains Tax revisited

Post by Nigel Howarth » 12 Feb 2018 20:01

Hi jackk19

Apologies - the € 25,629 allowance is only applicable for the sale of agricultural land by a farmer as Pan has said.

You are entitled to get a personal allowance when you sell a property until you reach the maximum lifetime allowance of € 85,430. After that you will get no more personal allowances.

If you look at the spreadsheet at http://www.mof.gov.cy/mof/cystat/statis ... penElement the last tab 'BASE_1992 (1980-2018)' has the rates dating back to 1980. (But the URL of this spreadsheet changes every month so it's best to look at the link I provided earlier and select the spreadsheet labelled CONSUMER PRICE INDEX – TIMESERIES (BASE 1992, 2005, 2015) (the penultimate one on the list).

Unfortunately the inflation table produced by the Tax Department hasn't been updated since May last year.

The cost of acquisition is adjusted for inflation is calculated using the official Retail Price Index. (If you can find that you're a better man than I)

Regards,


Nigel Howarth
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jackk19
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Re: Capital Gains Tax revisited

Post by jackk19 » 12 Feb 2018 23:49

Thanks again.
However I am still confused.
Can the allowances be used multiple times until exhausted. And if so can the 17k personal allowance be used for land as well as residencies until you reach the 85k. I say this as the 85k is always stated as being used for residencies occupied for 5 years or more.

Before you go to land registry do you have to take an accountants calculation if CGT liability as land registry won't calculate for you.



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Re: Capital Gains Tax revisited

Post by Nigel Howarth » 13 Feb 2018 00:04

jackk19 wrote:
12 Feb 2018 23:49
Can the allowances be used multiple times until exhausted. And if so can the 17k personal allowance be used for land as well as residencies until you reach the 85k.
Yes and yes. You'll need an accountant to work out the figures then present them to the Tax Department.

Regards,


Nigel Howarth
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jackk19
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Re: Capital Gains Tax revisited

Post by jackk19 » 13 Feb 2018 00:42

So do you pay the tax at the tax department or get a certificate that you present at the land registry?

Can you make appointment or is turn up and wait?



Nigel Howarth
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Re: Capital Gains Tax revisited

Post by Nigel Howarth » 13 Feb 2018 09:35

You pay CGT at the Tax Department and they will issue you with a receipt that you take to the Land Registry when the transfer takes place.

Regards,


Nigel Howarth
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Pantheman
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Re: Capital Gains Tax revisited

Post by Pantheman » 13 Feb 2018 10:22

jackk19 wrote:
13 Feb 2018 00:42
So do you pay the tax at the tax department or get a certificate that you present at the land registry?

Can you make appointment or is turn up and wait?
Here is an example of a CGT calculation, just put in the numbers you have and work it out. It should be close to what the Tax Dept. will do anyway.

EXAMPLE OF ESTIMATE OF CAPITAL GAINS TAX

1970: Α bought a building site for Cy.P. 1.500.
1990: Α transferred the building site to his son by gift.
1.2012 Β sold the building site to C for €200.000.
The value of the building site as at 1.1.1980 is €5.000.
Retail prices index on 1.1.1980: 67,15
Retail prices index on 1.2012: 224,82
Index difference: 224,82- 67,15= 157,67

Disposable Product 200,000
Minus 1.1.1980 value 5000
Minus inflation 5000x(157.67/67.15) 11,740
Minus Allowance (first sale( 17,086
TOTAL DEDUCTIONS 33,826
PROFIT 166,174
CGT 166,[email protected]% 33,235

Hope this helps. When you pay the tax at the tax office they issue you with a Tax Clearance Certificate. You then take this with the other filled in paperwork, plus a certificate from the muktar (local council or municipality) that all your taxes are paid to the land registry for transfer. You and the buyer both need to attend.


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jackk19
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Re: Capital Gains Tax revisited

Post by jackk19 » 13 Feb 2018 10:42

Thanks Pan.
So you have to pay all taxes and fees before you get to registry. If the sale happens at registry then you have to find the tax before your actual sale?
And do you have to have a contract of sale from a solicitor or can scribble something on a bit of paper.

All help appreciated as if I go over I want to have an idea of process plus how long I have to be there.



jackk19
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Joined: 22 Mar 2011 17:16

Re: Capital Gains Tax revisited

Post by jackk19 » 13 Feb 2018 10:48

Also you and Nigel appear to differ on allowances. Pan puts personal allowance in the context of first sale. Which I assume means the opposite of Nigel who says personal allowance can be used as many times till you reach 85k.
Knowing the answer will help me agree price.



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