In general, the sale of any of real estate in the context of commercial activity are subject to income tax.
In all other cases (except for the exceptions) VAT is paid. The CGT is calculated at a rate of 20% for each profit from the sale of any property. If it is not a purchase or sale, the market value at the time of disposal will be considered as a disposal product. The disposal product can be challenged by the Director of the Internal Revenue Department.
No tax is imposed in the following cases
a) for a profit resulting from the sale of property by a individual not exceeding the amount of ten thousand pounds (€ 17,086) or for a profit from the sale of agricultural land by an individual whose main occupation is agriculture, which does not exceed the amount of up to fifteen thousand pounds (€25,629) whether it was purchased during the same year or any other year.
b) for a profit resulting from the disposal of a main residence, used by the owner for a total period of at least five years exclusively for the purpose of private residence and located on land up to one and a half tenths, which does not exceed the amount of fifty thousand pounds (€ 85,430) and the area of the land does not exceed 1,500 meters
The following is deducted for the calculation of the profit:
a) the value of the property on 1.1.1980 plus the increase in value due to inflation.
For inflation charts click here.
b) expenses incurred after 1.1.1980 that are tax deductible.
The amount of damage resulting from the sale of property is calculated in the same way as the profit. When the amount of the loss cannot be fully offset by a gain on the simultaneous disposal of another property, the remaining amount of the loss is transferred and offset by a gain on a subsequent disposal of the property.
Download a capital gains tax calculator here.
MRICS, BSc (Fin), BSc (RE)
Co-Director, Head Of Larnaca Office