In a bid to stimulate the housing market and boost property ownership, the Cypriot government introduced a reduced VAT (Value Added Tax) rate in 2017. This tax incentive applies to individuals purchasing their first property, provided it will be used as their primary residence. The standard VAT rate when purchasing property in Cyprus stands at 19%, but for first-time buyers, it is reduced to just 5%. This significant reduction translates into substantial savings for those taking their first steps on the property ladder. In this article, we will explore the eligibility criteria and its implications for first-time buyers.
To benefit from the reduced VAT rate when purchasing your first property in Cyprus, you must meet specific eligibility criteria, which include:
a) First-Time Buyers: As the name suggests, this initiative is exclusively for first-time property buyers. If you've never owned property in Cyprus, you qualify for the reduced VAT rate.
b) Permanent Residency: To be eligible, you must intend to use the property as your primary residence in Cyprus. This means you should be a permanent resident of the country.
c) Property sq.m. Limit: As of 1st November 2023, the reduced VAT rate applies to properties for the first 130 sq.m. of a house or apartment with a value of up to €350,000. Properties with an area over 131 sq.m. and less than 190 sq.m. will be charged at the standard VAT rate. (e.g A property with 190 sq.m. area, the first 130 sq.m. will be charged with 5% VAT and the rest 60 sq.m. will be charged with 19% VAT). For houses and apartments exceeding 190 sq.m. and valued over €475,000 a 19% VAT will be imposed right from the first sq.m.
d) Age Limit: The applicant must be at least 18 years old to qualify for the reduced VAT rate.
e) Application Process: The application process involves submitting relevant documents and a declaration to the Cypriot Tax Department, confirming your eligibility.
However, the implications that come with the reduced VAT rate when purchasing your first property in Cyprus, is that you cannot rent or sale this property for a specified time period.
In summary, the reduced VAT rate for first-time property buyers in Cyprus is a significant incentive that has made the dream of owning a home in this beautiful Mediterranean island more attainable. With the potential for substantial savings on property purchases, this initiative has attracted individuals seeking a place to call home.It's crucial for first-time buyers to carefully review the eligibility criteria. As such, our legal team at George C. Stylianou Law Office is perfectly positioned to assist you and ensure a smooth and successful property purchase process.
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