Tax Implications of Selling a Property: Five Must Know Terms

Property management can at times become a complicated business involving a plethora of protocols and arcane abbreviations. This will make the field daunting, but knowing the basics and is the key to coming out on top. The following are a few terms that will help you on your way there.1. Short Term Capital Gain (STCG)When selling your property, the profit you earn is taxable. Setting a standard rate for property taxes might seem logical, but due to the dynamic nature of the field, it wouldn’t be fair to everyone.To counter this, the profits earned have been split into two groups; Short and Long Term Capital Gains, based on how long it takes you to sell your property from the date of the purchase. If the duration between your property purchase and sale is less than 36 months, then the profit earned comes under Short Term Capital Gain. The profit earned in this case will be classified as additional income and the tax rate on this will mirror your personal income tax rate.2. Long Term Capital Gain (LTCG)If you sell your property after a period of 36 months, then the profits you earn will come under Long Term Capital Gains. Under this criteria, the profit earned will be taxed at 20%.3. Tax ExemptionIn certain cases, you can legally avoid paying tax on the profits earned. This can only be done if your profits come under the LTCG. You can claim exemption from tax by reinvesting the profit in certain investment avenues. Make sure you talk to the tax authority before you make an investment as these investment terms are subject to change.4. IndexationA property trade can cover a very wide time frame, from a few hours to a few decades. The short-term transactions do not need indexation, but if you purchase a property and sell it after a few years, then indexation becomes a key factor when calculating the cost of acquisition and development of the property. Indexation factors currency inflation into the tax calculation by using a Cost Inflation Index (CII) number. This figure is published by the Body that manages the monetary policy of the region, usually a central banking institution.5. Capital Gains Account SchemeIf you are unable to make the investment at the right time to avail the tax benefit, you can opt for a Capital Gains Account Scheme (CGAS). To avail this scheme, you must deposit the profits earned from your property sale in a savings or a term deposit account, under a nationalized bank in accordance to the CGAS. However, this scheme has certain restrictions, I.e. once deposited, the capital can only be used to buy or invest in a residential property. Furthermore, the capital needs to be invested in the stipulated time frame or it will be classified as a Long Term Capital Gain and will be taxed at the standard LTCG rate.

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Northern Cyprus Property: What’s the Attraction?

Northern Cyprus. Miles of rugged natural coastline, secluded sandy coves and beautiful un-spoilt beaches, lapped by the clear blue waters of the Mediterranean Sea. Framed by the peaks of the magnificent ‘Five Finger’ mountain range, down into the central plains stretching between Famagusta and Nicosia, it is truly one of the last un-spoilt destinations in the Mediterranean. A haven of natural beauty, with pine clad hillsides and miles of sandy beaches making it the unique destination most people believe no longer exists. The coastline of North Cyprus offers some of the finest and safest bathing in the Mediterranean. The crystal clear waters are wonderful for swimming, snorkeling, sailing and skiing.An ancient island, inhabited since the Stone Age, it is the legendary birthplace of Aphrodite, Goddess of Love. Past inhabitants have included Egyptians, Persians, Romans, Venetians, Ottomans and British. The heritage and culture from these civilizations are evident all over the island, but none more so than in the North, where sites of historical interest abound. The castle of St Hilarion and the Abbey ruins at Bellapais are just two of the wonderful relics of these past times, and still exude atmosphere.The identity of the island is very Cypriot however. The warm and welcoming nature of the people is one of the first things you notice when visiting for the first time. Go into any of the local towns and tavernas you will experience firsthand the friendly atmosphere that makes you feel immediately at ease. Many of the local people speak and understand English and encourage visitors in their attempts at the language. There are several places where you can learn to speak Turkish in a relaxed atmosphere, something to keep you busy through the cooler winter months perhaps!A food lover’s paradise, you don’t have to wander far to sample delicious fare freshly prepared with the abundant local vegetables and locally caught fish. With over 300 restaurants and tavernas to choose from, it would be impossible not to find somewhere that wouldn’t satisfy the most diverse of palates. The local Cypriot food is of course influenced by Turkish culinary art, although there are many excellent restaurants specializing in European and international cuisine. An evening stroll down to the harbour in Kyrenia will find visitors spoilt for choice between numerous bars and restaurants where you can sit and while away the hours whilst enjoying a leisurely meal. Eating out is still relatively inexpensive, and always a great pleasure! There are several nightclubs in and around Girne (Kyrenia) for those who wish to have a more active nightlife!The cost of living in Northern Cyprus is notably less that in the UK, but standards are on a par, with the added bonuses of fantastic scenery and weather! The number of permanent British residents is growing every year, and integrating with the local communities, rather than outside them as has been the case in other countries favoured by ex-pats. A legacy from the British colonial days means that traffic drives on the left and since car hire is cheap and easy, travelling around is no problem.In the past two years, Northern Cyprus has experienced a true property boom. Property prices have doubled in the last year, with still more potential for capital growth. There are many different types of property to be found, from large and small villas to town centre apartments. Popular choices amongst these are the gated complexes of apartments being built by SeaTerra, one of the largest developers in North Cyprus. Out towards the East side of Girne, their projects are set next to the village of Esentepe and further along the coast road towards Tatlisu.The fact that so many people are now becoming aware of Northern Cyprus shows there is huge potential for more tourists to start visiting the area. This seems to be a European and even worldwide awareness. With around 215,000 people living there permanently, this figure more than doubles in the summer months. With both a new golf course due to be opened shortly, and plans for a 400 berth yacht Marina just along from Esentepe, this will no doubt prove to be a big draw for those who have not as yet discovered this wonderful place. At the moment there are about 60 hotels in the region, with another 11,000 beds planned and in the process of being built. More than 60 flights per week arrive at Ercan Airport during the summer, this grows steadily and countless other flights bring people to Northern Cyprus via Larnaca in the South. The winter tourist is also increasing in numbers hugely proving that the secret of Northern Cyprus is well and truly out.This article has been provided by Karen Arter, marketing manager for Cyprus SeaTerra a specialist Northern Cyprus property developer. For further information visit north-cyprus-properties-sale.co.uk or cyprus-seaterra.com.

Has the Time Come to Purchase Property in Cyprus?

Has the time now come to buy property in Cyprus again? This is the question that all potential buyers and investors are currently asking.As mentioned repeatedly over the last few months by the Cyprus Association for the Promotion of Property Development, house and apartment prices in both Nicosia and Limassol have remained steady, and as it is unlikely that the prices will fall further in the coming months, for anyone considering buying a property, now is as good a time as any.Some of the main reasons for the market stabilizing over the past months are:
According to both official statistics and opinions of various developers and agents, the frequency of property sales has increased steadily over the past few months. For example the amount of property transactions completed in October 2009 was down just 29% in comparison to October 2008.
Local banks have a much improved cash flow now thanks to a new government scheme offering the banks new liquidity via bonds. This in turn enables the banks to offer competitive housing loans with low interest rates and gives potential purchasers the opportunity to buy.
The larger European economies, the US economy and the Japanese economy are all gradually recovering as are both their psychology and investment sentiment which without doubt will give a boost to the holiday home market in Cyprus. Also officially on the way up is the English market, a key market for Cyprus.
More tourists are expected to be visiting the island in the coming months thanks to the new 60 million Euro injection by the government to the Cyprus tourist industry. This should in turn restrict growth in unemployment figures to an extent as they have been steadily rising over the past few months in Cyprus.
From the above points, it is possible to draw several conclusions.Those with intent to purchase a property should proceed. At present there is a huge selection of finer properties to choose from as well as prices at their lowest level.There may even be a slight increase in prices over the coming months as stock may be limited. It is also quite possible that available units will be limited in quantity as building permits for new developments have decreased.City centre commercial property has deviated slightly in relation to market trends and has actually displayed upward movement during this economic crunch.Although impossible to predict exactly what will happen with the Cyprus real estate market over the next few months, it is possible to now see clearly that the last six months showing encouraging movements in the right direction. We can now assume that this upward trend over the last period should provide positive consequences.