Cyprus a great choice for the property investor

Cyprus is a popular choice with investors who wish to avoid paying CGT (capital gains tax) on the sale or properties in the UK. However, before building a new property portfolio in Cyprus, investors should be aware that the sale of land and property situated in Cyprus will be liable to a CGT of 20%.

Cyprus has double-tax treaties with 27 countries, including most of western and Eastern Europe, which allows a resident of Cyprus to extract profits from those countries at a reduced rate or with no tax payable at all. Also the government does not tax its residents on interest received, dividends, or profits from the sale of shares. The country is especially generous to pensioners, taxing them just 5% on their income.

Despite being well developed, with excellent communication and transport links, Cyprus has a lower cost of living than most of Europe. It also has a lower cost of living than most of Europe. It also has a very low crime rate, most people speak English and it offers warm sunshine from March to November.

In order to be classed as a Cypriot resident you need to spend at least 183 days in the country during the tax year. Property prices in Cyprus have been booming in the last few years but it is still cheaper than the UK, US or Canada, and a nice house can still be bought for less than £150,000.

But in Paphos, which is the most expensive region of the island, prices are much higher says David Pollard of Universal Vacations Realty “A two bedroom apartment will cost CY£120 – CY£175,000 and a three bedroom villa CY£250 – CY£400,000. Paphos is still the most popular place for property investors because the season is longer and there is better rental potential. Most buyers want to use the property for a few weeks a year and rent it also, but around 40% are buying for pure investment purposes.”

David Pollard says that buyers in Paphos should expect to let their property for around 24 weeks a year and in the high season rental prices for an apartment rocket to £70 – 75 a night. Despite this, he advises buyers to expect an overall annual rental yield of around 5%. With regards to capital appreciation, he says: “new builds generally rises quicker, at around 10 – 12 % a year, while re-sale properties rise by 5-8%.

There have been some over building in parts of Paphos and Larnaca, so it is all about location, being near the beach or having a great view, and having extras like a Jacuzzi or a gym. This will help you rent it, and eventually re-sell it, more easily. There is still a market for long-term lets but they are more in Nicosia, for the student market, and SWW for company rentals. Some companies will guarantee to rent the property for three to five years and the rent will cover the owners mortgage adds David.