Finance Tax Time

The Capital Gains Tax rate in Cyprus 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.

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.

http://www.mof.gov.cy/mof/cystat/statistics.nsf/All/F799BCBF16A29708C2256D640042C313/$file/CPI-HISTORICAL%20DATA-EN-090106.xls?OpenElement

Avoid CGT in Cyprus

In Cyprus there is no taxation on the profits from the disposal of securities for individuals that are residents of Cyprus. “Securities” is defined as shares and other securities of companies or other legal persons, incorporated under the law in Cyprus or abroad and options thereon.

So to legitimately avoid all Cyprus CGT then you could purchase your property in Cyprus using a Limited Company registered in Cyprus.

But you will still have to pay UK CGT but the good news is that you can set off what you have paid in Cyprus. Finally the article tells you how to avoid paying Cyprus CGT all together.

John Mason is the owner and author of http://downtoearthcyprus.net. Down to Earth,Cyprus provides all you need to know about property purchase and finance in Cyprus.Your Definitive Guide to Buying Real Estate in the Republic of Cyprus.

You may freely distribute this article on condition that you keep this Author bio intact with an active link.

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As a gentleman was leaving my class recently, he wanted me to clarify something I had said. He was making sure that he should take his four or five thousand dollar tax refund and pay off debt.

I was stunned. This money represented $400-$500 that could have been in his pocket every month. A survey of my friends this week revealed one who was getting back $2800 and one getting $3300 back this year.

Getting a large tax refund (over $500) means you are having too much money withheld from your check every pay period.

Many people use this as a forced saving plan and it does not make any sense. You are loaning the government YOUR money, interest free. Every $1200 in refund is an extra $100 per month you could have used to eliminate debt or invest for your future.

I ‘d venture to say that most people who do get large refunds could use this money every month to ease their debt burden. This burden frequently leads to late charges and higher interest rates. Instead, they like the feeling of getting that big check in the mail and figuring out how to spend that chunk of money.

The ideal situation is to either owe or get back $100.

If you get a big tax refund then you should adjust your allowances. The more allowances you claim, the less money is withheld from your check for taxes. It generally does not matter how many allowances you claim. If the government gets it’s money they really don’t care how many allowances you claim.

Here is how to get it right. Take the time to complete the appropriate worksheets included on Form W-4. The worksheets will help you determine your withholding allowances based on your income, adjustments, deductions, exemptions and tax credits. The worksheets can help you figure the right amount so you don’t have too little withheld.

The IRS now has a calculator on their website which you can now access anytime at: http://www.irs.gov/individuals/article/0,,id=96196,00.html

If you need help ask your payroll administrator at work or an accountant.

Keep your money working for YOU!

Leo J. Quinn, Jr. owner of http://www.LeoQuinn.com is a financial educator from the Albany, NY area. For over eight years he has been helping thousands of people get control of their finances and get out of debt in a fraction of the normal time. He has a special offer for readers of this newsletter at http://www.1shoppingcart.com/app/adtrack.asp?AdID=132551

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