Contents:

• Capital Gains Tax
• Cost of Living
• Currency
• Home Insurance
• Income Tax
• Mortgages
• Pensions
• VAT
• Wills
• Summary of Property Purchase & Running Fees

Capital Gains Tax

Capital gains tax is payable by both residents and non-residents at a rate of 20% on gains from the disposal of immovable property in Cyprus.

If the property is a principal residence, there's a lifetime (i.e. once only) exemption of CY£50,000. For any other kind of property (e.g. a holiday home), only CY£10,000 is exempt, and this exemption is per registered owner, not per property. (You cannot claim both of these exemptions!)

Other exemptions from capital gains tax include the following:

• Transfers due to death;

• Gifts to close relatives such as spouses or children;

• Gift to the government or a charity;

• Exchanges or sale in accordance with Agricultural Land Laws;

• Exchanges of properties where the value is equal.

If you've made any improvements or additions to the property, this will be deducted from the assumed profit, thereby reducing your liability.

Cost of Living

The cost of living is relatively low in Cyprus, with prices around 25 per cent lower than in most northern European countries.

As expected, prices have risen slightly since the country's EU accession, and a survey carried out by the Cyprus Consumers' Association in 2004 showed that prices had risen on average by 1.6 per cent since then.

According to the results of the Cypriot government's Household Budget Survey 2004, average monthly outgoings for a single person are CY£647, for a couple CY£970 and for a couple with two children, CY£1,358. This is a basic guide and will obviously vary according to circumstances and lifestyle.

Currency

Whether you're buying a dream holiday home or investing in Cypriot property, you will have to make one or more currency transactions to complete the purchase.

The issue needs serious planning, especially if you are buying a new development 'off plan' where you will be required to make a number of 'stage payments' during the construction of your property.

Whilst you will know the price of the property in Cypriot £'s, the actual cost in Sterling will be determined by the exchange rate you obtain. If Sterling strengthens during construction the cost will decline, but if the Cypriot £ strengthens, then your costs will increase – i.e. a stronger Cypriot £ means your dream home will be more expensive.

HIFX Plc are specialist foreign exchange brokers who not only save you money when buying currency to pay for an overseas property, but also educate you on how to avoid 'currency risk'. Their primary aim is to make the currency aspect of your property purchase as simple, cost-effective and stress-free as possible.

HIFX has helped over 40,000 private individuals buy and transfer currency and  currently work with most of the major overseas property agents, lawyers, developers and migration agents, which has given us an unrivalled knowledge and understanding of the market.

Competitive exchange rates which save you money are just the start. HIFX is the only currency broker to have eliminated all bank receipt charges.  As a result they can guarantee that Shervington's clients will not have to pay any receipt charges when they send funds abroad.* Other brokers only offer a free UK transfer on larger transactions and some eliminate receipt charges only if clients open accounts with specific branches of specific banks

Straight forward explanations of the risks and how to best protect against them, as well as no fees or commission charges also ensure that every aspect of your currency transaction is as simple and cost effective as possible.

No one can predict the currency markets, but HIFX has been ranked within the top 3 most accurate foreign exchange forecasters globally by the Reuters Forex Poll.  Published in January 2005, the league table compares all the major banks and financial institutions worldwide over the last four years.

For more information contact us on info@shervingtons.com

* Should a client incur charges, HIFX will refund these charges in full.

Home Insurance

As an overseas property owner, or someone who is about to invest in property in Cyprus arranging suitable insurance cover is essential to protect your investment.

Many UK residents however, often choose a policy offered by a foreign insurer that offers limited protection, is written in a foreign language, and as a result is not suitable for the special requirements of overseas property ownership.

HIFX Insurance Services* provides tailored insurance policies designed to meet the specific needs of holiday home and overseas property owners. 

Underwritten at Lloyds of London, our policies have been created to provide customers with total peace of mind and exceptional value.

Cover includes:

• Buildings

• Contents

• Travel

• Title Insurance

All documentation is in "Plain English" and all claims are handled by overseas property specialists in the UK.

For more information and the opportunity to save up to 35% on your premium contact us on info@shervingtons.com.

*HIFX Insurance Services Ltd is authorised and regulated by the Financial Services Authority.

Income Tax

Resident taxpayers in Cyprus are taxed on all income acquired or derived from sources in Cyprus and abroad. Resident taxpayers are persons who live in Cyprus for a total of more that 183 days in the taxation year.

Non-resident taxpayers in Cyprus are taxed on income acquired or derived from sources in Cyprus only. 

Income Tax Rates

• 0% for the first £10 000

• £10 000-£15 000, rate of 20%

• £15 000-£20 000, rate of 25%

• over £20 000, rate of 30%

Mortgages

Making the dream of purchasing a property in Cyprus a reality is a very exciting step to a new way of living, and it's important to have a sound financial plan in place.

At Shervington's we have financial experts who are able to source the best options of financing your holiday home in both the UK and Cyprus. We offer you a friendly, efficient service geared to giving you the most cost effective mortgage deals available for your personal requirements. We can even obtain a mortgage agreement in principal before you visit Cyprus, giving you the confidence of knowing monthly repayments before viewing.

For further information email: info@shervingtons.com

Pensions

When can I claim my UK pension?

The UK State Pension age is 65 for men and 60 for women. The State Pension age for women is changing and will gradually increase from 60 to 65 between 2010 and 2020.  

Can my UK pension be paid to me while I am in another EEA country?

You can be paid a UK State Pension (with an extra amount if you are aged 80 or more), in any other EEA or agreement  country. You will get the same as you would get in the UK.

Direct Payment of your pension if you live overseas

Payment into an account is the normal method of paying pensions. People can experience delays in receiving order payables, or even not receive them at all. Other benefits of payment into an account are:

• it is safe and secure

• it is convenient (money can be withdrawn from cash machines, you do not have to make a journey to cash your order payable)

• payments will be made in your local currency

• there are normally no individual bank charges or transaction fees

• you will benefit from competitive exchange rates based on bulk buying of currency if you select overseas Direct Payment

• there are no cheque clearance delays

For further information with regards to receiving your pension in Cyprus, you can contact The Pension Service International Pension Centre (IPC).

Tel: 00 44 191 218 7777     Opening hours are 8.00 am to 8.00 pm
Fax 00 44 191 218 7293

Or you can write to

The International Pension Centre,
Tyneview Park,
Newcastle Upon Tyne,
NE98 1BA

VAT

Developments that have been granted planning permission after May 2004 are subject to VAT at a rate of 15%.

Wills

Once you have purchased property in Cyprus it is essential to protect your asset by setting up a Will in Cyprus.

One of the greatest advantages of the current law in Cyprus is that there is no inheritance tax connected with movable and immovable property - in the jurisdiction of Cyprus- passing on to beneficiary(ies) in the event of death of the testator.

The services offered include through our company Lawyers include:

• Drafting Wills

• Obtaining Probate Order

• Administration of Estates

• Resealing

Summary of Property Purchase and Running Fees

For an example of purchasing costs take this CY£150,000 new-build three-bedroom bungalow in Paphos, purchased by Mike and Sue Phillips, in February 2006.