Buy-to-Let and Investment Property in Cyprus

Cyprus has a beneficial tax regime for residents and retirees, which makes it an attractive option for those wishing to invest in buy to let properties.

Amongst the benefits for a UK buyer of investing in Cyprus property are:

No Inheritance Tax
Overseas dividends and interest exempt
Profit from the sale of equities exempt from Capital Gains Tax
Profit from the sale of UK properties, including investment properties, exempt.
Retirement income taxed at 5% not at up to 40% as the UK.
Lump sums on retirement exempt.
Profits of sale of private companies exempt.
Capital sums from approved funds, i.e. pensions, exempt
Buy-to-Let Investments
The Buy-to-Let market has matured over the last ten to fifteen years. In 2003 the average sized portfolio included three to four properties, but now the portfolio average is 11.8 properties worth £1.45 million. This figure is expected to grow to 12.2 properties, worth £1.52 million over 2006.

More than three quarters of all Buy-to-Let investors are investing for the long-term. More than a quarter of these investors are aged between 25 and 35 but those between 35 and 45 account for 37% of the market.

The attraction for the current Buy-to-Let investor (particularly those in the UK), is the tax advantages of Cyprus. When these investors choose to retire or acquire tax status in Cyprus, their situation changes dramatically. Upon attainment of Cypriot tax residency and domicile, the tax treaty of Capital Gains Tax (CGT) is hugely advantageous.

With their new Cyprus tax status, the Buy-to-Let investor, with tax planning, can reduce their CGT liability. Their UK Buy-to-Let investments become \\\"foreign investments\\\' and therefore exempt for CGT.

Expected returns of Buy-to-Let
Cyprus net rentals returns vary between 4.5% and 11% per annum.

The average rental net return in Britain today maintains around the 3% to 4% mark, and capital appreciation may match this, however there is the likelihood that there will be a static capital value for the next three to five years. Capital appreciation in Cyprus is still in double figures, expecting to show 10% to 17.5% especially with off-plan projects.

As a bench mark, the net rents should be financing at a maximum 65% gearing, assuring any mortgage commitments will be self-financing.

Off-Plan Investment Market
There are large numbers of investments in Cyprus that receive a very good return in the off-plan-build market environment.

Generally the \\\"buyers\\\" tend to be impulsive and demand that the properties are completed, so they can actually see the properties and therefore the prices are reflected by this. Accordingly the investor who is prepared to buy off-plan, is offered the opportunity to make an excellent capital return by selling the property just before the property is completed.

However the investor has to be aware that the \\\"investment\\\" needs to be in the right area and that the property is a viable project that will be easily sold to release the capital appreciation. The project has to be carefully selected to ensure that the investor has full local knowledge

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