Reduce Capital Gains Tax
The Capital Gains Tax rate is 20% of the chargeable gain as adjusted for inflation, but certain lifetime exemptions apply to individuals for the disposal of their main residence. The first CYP10,000 of a gain is exempt. This exemption limit rises to CYP50,000 if the seller has lived in the property continuously for the previous five years. Further allowances are granted in relation to transfer fees, inflation and improvements made to the house, services of registered estate agents, but the total exemption cannot exceed a CYP50,000 limit. Capital Gains Tax does not apply to profits from the sale of overseas real estate by residents who were not resident when they purchased the asset.
Note that these are personal allowances. So if the property is owned in joint names, e.g. husband & wife, each owner is entitled to the exemption of CYP 10,000 or CYP 50,000.
Don’t forget that in addition to the personal CGT allowances you can also claim an Inflation Allowance.The indexation factor is based on the cost of the property if purchased after 01/01/80, using the Consumer Price Index (CPI) in the month preceding disposal and CPI in month of acquisition. Disposals of building sites use the 1980 valuation for CPI purposes.The data is below.Also you can deduct the following: Allowable expenses:-Land Transfer Fees
Stamp Duty
Estate Agent’s Commission – (but only if a licenced agent)
Professional Charges
Advertising
Capital Additions or Improvements – (receipts required and planning permission where necessary)
Indexation can be applied to the above expenses as well as the initial purchase price.
Additional allowable expenses:-
Immoveable Property Tax
Interest on Loan used for the Acquisition of the Property
These expenses cannot be indexed.
If you’re selling a property partly/fully furnished there is a perfectly legal way to reduce your CGT liability.
| Quote: |
|
My lawyer came up with this idea in 2004. |
Have two contracts; one for the sale of the property and the other for the furniture, etc (this is known as a furniture agreement).
Have two contracts; one for the sale of the property and the other for the furniture, etc (this is known as a furniture agreement).For CGT purposes, the IR will only be interested in the gain you make from the sale of the property.
Cyprus Property Help & Advice Centre™ ® ©The Black Art of Buying Property in Cyprus™ ®
The Cyprus Informer™ ® ©
http://cyprusinformer.eu
