inheritance, Law
inheritance, Law

Cyprus Property Taxes Explained: A Legal Guide for U.S.-Based Expats

Owning Property in Cyprus While Living in the U.S.: What Expats Need to Know About Taxes

 Introduction

Many Cypriots living in the United States own property in Cyprus. Whether used for rental, sale, or personal use, these properties can trigger tax obligations in Cyprus, regardless of where the owner resides.

Unfortunately, many expats are unaware that their property may create an active relationship with the Cyprus Tax Department, leading to fines or interest if not managed properly.

Types of Income and Obligations

✅ Rental Income from Property in Cyprus:

  • Taxed in Cyprus under personal income tax

  • Subject to an additional Special Defence Contribution (SDC)

    • SDC rate: 3% on 75% of the gross rent

  • Must file both income tax return and SDC declaration

✅ Sale of Property in Cyprus:

  • Subject to Capital Gains Tax (CGT) at a flat 20% on net profit

  • Lifetime exemptions may apply:

    • €17,086 for any sale

    • €85,430 for your main residence

✅ Owner-Occupied or Inactive Property:

  • No tax applies if no income is derived

  • However, it’s advisable to file a zero-return if required under law

Declaration and Tax Filing

  1. File income tax via the TaxisNet Cyprus system

  2. Declare rental income under Code 108

  3. Calculate and pay income tax & SDC via JCC Smart or bank deposit

  4. For property sales: notify the Land Registry Office and file CGT declaration

Common Mistakes by U.S.-Based Cypriots

  • Not declaring rental income in Cyprus

  • Assuming U.S. taxation removes the obligation to declare in Cyprus

  • Ignoring the SDC filing requirement, which does not exist in U.S. tax law

  • Selling real estate without filing for CGT → can delay transfer of title

  • Failing to obtain non-residency certificate for SDC exemption

The Cyprus–U.S. Double Taxation Treaty

The 1985 treaty ensures that:

  • Rental income is taxed where the property is located (i.e., Cyprus)

  • Tax paid in Cyprus can be credited against U.S. tax via IRS Form 1116

  • Omitting declarations in Cyprus can create issues in both jurisdictions

How E. CHATZIDIMITRIOU LLC Can Help

Our legal team provides:

  • Review of your real estate portfolio in Cyprus

  • Preparation and filing of income and SDC tax returns

  • Capital Gains Tax support for property sales

  • Issuance of non-residency certificates to exempt SDC

  • IRS support for foreign income reporting

  • Resolution of disputes with the Tax Office or Land Registry

We offer full remote representation under Power of Attorney.

Contact Us

www.hatzidimitriouvirtuallaw.com

Email: info@hatzidimitriouvirtuallaw.com

U.S. Phone: +13474034789

Own property in Cyprus? Stay tax-compliant with our legal guidance — no travel required.

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