How can individuals significantly save money when buying a house or apartment in Cyprus in 2024

How can individuals significantly save money when buying a house or apartment in Cyprus in 2024

Special VAT when buying real estate in Cyprus

How can individuals significantly save money when buying a house or apartment in Cyprus in 2024, and what conditions must be met? Let’s take a detailed look.

The price of new real estate properties in Cyprus includes value-added tax (VAT) charged at the standard rate of 19%. However, there is an opportunity to apply a reduced rate of 5% if the purchased property will be used as the main place of residence. There are several conditions that must be met.

The reduced VAT rate of 5% can be applied if:

– The buyer of the property is an individual, not a legal entity.
– The acquired property will become the main place of residence for its owner in Cyprus for at least the next 10 years.
– The buyer does not own any other property in Cyprus that was previously purchased using the reduced VAT rate.
– The property will not be rented out or used for any other purpose to generate income.

Rules for applying the reduced VAT rate of 5%:

– The 5% VAT rate applies to the first 130 square meters of housing with a value of up to 350,000 euros.
– The total cost of the property must not exceed 475,000 euros, and its area cannot exceed 190 square meters.

The above rules do not apply if the building permit for the property was obtained or the application for it was submitted before October 31, 2023, and the corresponding application for applying the reduced VAT rate was submitted before June 15, 2026. In this case, a different rule applies: the reduced rate is applied to the first 200 square meters of the property, regardless of its price and total area.

Selling and renting out – not earlier than 10 years

If the buyer decides to dispose of the property as their main place of residence in Cyprus before 10 years from the date of actual possession (for example, by selling the property or renting it out), they must notify the tax department within 30 days and pay the difference between the reduced and standard VAT rate.

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