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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If you live and work outside of the United States, I may have some very good news for you. Although Americans are taxes on their worldwide income, you may be able to claim a huge deduction.

Dealing With Taxes If You Live and Work Outside The United States

As the global economy continues to integrate companies and workers, you may find yourself living and working full time in another country. From a tax point of view, this can be a bit problematic since the Internal Revenue Service demands you pay taxes on all of your income regardless of where it is earned. If you are paying taxes in the country you are working in, the double whammy can wipe you out. Alas, there is a solution to this problem.

If you meet certain requirements, the IRS allows you to exclude up to $80,000 of your income from being taxed. You may also be able to deduct certain amounts you paid for your housing.

To qualify for these exclusions and deductions, you must have earned the income abroad and be living abroad. You must also claim residency in a foreign country for the entire tax year or be present in that country for 330 days out of 12 consecutive months. If you meet these fairly simple requirements, you will save a bundle on taxes. Please keep in mind that you must file a tax return with the IRS even if you do not owe any money because of the exclusion.

In certain situations, you may also be able to claim the exclusion and deduction if United States and country have a tax treaty covering the issue. To promote trade, many countries enter into tax treaties to address double taxation issues that would otherwise make most trade financially impossible. Many such treaties exist between the United States and other countries, so make sure to review any for your location.

Living and working abroad is much more common than it use to be. Make sure you understand the above requirements so you can avoid unfortunate tax consequences.

Richard A. Chapo is with BusinessTaxRecovery.com - providing information on taxes.

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