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VAT when buying a property in Cyprus

VAT when buying a property in Cyprus

When you think about buying a home in Cyprus, you should not forget to include VAT in your prepared budget. When buying new buildings, paying tax is almost inevitable, but there are a number of nuances that will help you get a preferential rate. Find out more about everything related to VAT on Cyprus property from this article.

VAT on the purchase of property in Cyprus

The purchase of property in Cyprus is subject to value added tax (or VAT). There are exceptions to this rule: the purchase of any secondary housing is not subject to VAT, like real estate, with a building permit obtained before May 1, 2004. (However, when purchasing a second home, you must pay a property transfer tax.)

Renting real estate, subject to a transaction without the right to purchase, is not subject to VAT.

VAT rates in Cyprus:

The generally accepted value added tax rate in Cyprus is 19 percent. But this is not the only possible betting option:

  • zero rate (resale properties and new buildings with a building permit until 1.05.2004);
  • standard – 19%;
  • reduced 5%.

Let’s take a closer look at all the nuances of obtaining a reduced VAT rate when buying property in Cyprus.

VAT exemptions for the purchase of property in Cyprus

In 2012, the VAT rates for real estate in Cyprus were reduced from 19% to 5%, a similar benefit applies to new buildings.In order to receive a preferential rate for real estate tax in Cyprus, you must comply with the list of conditions:

  • The age of the buyer is 18 years and older;
  • The exemption applies only to individuals;
  • One-time benefit, only for the first purchase of housing;
  • The object is acquired for personal residence, without the purpose of generating income. It must be the main residence of the buyer, without the right to rent for 10 years;
  • Favorable interest rate will be valid only for 200 m2 of the total area of ​​housing.

The concept of “basic housing” does not mean a ban on leaving the country. However, if in less than 10 years the property purchased at a preferential VAT rate is resold or rented out, the buyer will have to pay the previously saved 14% tax to the treasury of Cyprus.

The preferential VAT rate for real estate in Cyprus is issued upon application to the relevant department. A document confirming the first participation of the buyer in this program will be required. A similar document will be required for the spouse of the applicant.

To save on taxes and receive a benefit, you will need to attach to the application:

  • Purchase / sale agreement for the object
  • Copies of passports of the applicant and spouse
  • Marriage certificate
  • Architectural plan of the object
  • Documents confirming the area of ​​real estate
  • Copies of utility bills

The entire list of documents is submitted to the VAT department within 6 months from the date of their receipt. Additional documents may be required, depending on the situation (building permit, etc.).In the case of buying a property without using it (which requires confirmation), you can return VAT on property in Cyprus upon further sale.

Interested in buying property in Cyprus and enjoying preferential VAT terms? You can always contact our real estate agents for advice!


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