Cyprus Property VAT on Purchases
Cyprus property VAT is added to purchases at the rate of 15%, where the property is a new build with the town-planning permit applied for after 1 May 2004. Property town planning permits applied for before 1 May 2004 do not attract VAT. Real estate agencies should specify the Cyprus property VAT status of each property for sale. If they do not clearly indicate the VAT status, make sure you clarify this point, since an extra 15% on your property purchase makes a considerable price increase.
When the purchase (house or flat) is the buyer's first private residence, they are entitled to apply to the local authorities to claim back approximately 10% VAT. However, you need to pay the amount in full first, and then make the claim in effect (paying) only 5% VAT. These are economic incentives for first-time buyers.
Custom built properties all carry the 15% VAT and so do properties with a covered area of more than 250m2. The government feels if you can afford such a large house, you can pay the VAT. Therefore, build or buy a house of less than 250m2!!!!!!!!
Exemptions to VAT on Cyprus Property Purchases:
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You must live in the property for 10 years or you will be required to refund the VAT proportionally.
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Having lived in a VAT property for more than ten years, you are entitled to purchase another house with the same VAT rights.
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The property must be your main residence and you should not have a second residence in Cyprus.
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You must use the property for no less than 186 days per year (foreigners), proving the property is your permanent residence with water, electricity, and telephone invoices.
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Your application to refund the VAT must be completed a long with; a copy of the contract and a copy of the building permit.
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You pay VAT once. When you sell your property, there is no VAT.
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VAT is not paid if you do not live in or rent the property. When you sell the property, as with an investment property, the original buyer charges VAT to the new buyer, to be paid to the government.
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Resale properties have NO Cyprus VAT added. A resale property is a second hand property.
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Land purchases have NO VAT added although VAT may be applied from 1 January 2009.
VAT refund is based on a formula using the area of the property in m2 (square meters) and the cost to build in cost/m2. This formula is independent of the purchase price of the property. See table below.
| Purchase of property |
Cost/m² € |
Area m² |
Return of 10% VAT € |
|
Flat One bedroom |
950 |
65 |
5370 |
|
Flat. Two bedroom |
950 |
100 |
8260 |
|
Flat three bedroom |
875 |
130 |
9891 |
|
Flat three bedroom |
875 |
150* |
9891 |
|
Detached house |
1000 |
200* |
8863 |
|
Semi-detached |
750 |
200* |
|
|
Building a house |
|||
|
Building a house |
500 |
130 |
5652 |
|
Building a house |
500 |
250* |
6304 |
|
Building a house |
500 |
300* |
15217 |
|
Purchase of house from a family with 4 children |
500 |
250 (grant for 145) |
6304 |
|
Purchase of house from a family with 6 children |
1000 |
250 (grant for 175) |
15217 |
| * Note: The return of the V.A.T. applies for houses/flats with an area of up to 250m², but the V.A.T. is refunded on the area of up to 130m² only. | |||
When new laws on Cyprus property VAT are available, they will be added here.
See Also: Cyprus Property Lawyer | Cyprus Estate Agents | Cyprus Transfer Fees | Cyprus Property VAT | Cyprus Stamp Duty | Cyprus Council of Ministers | Cyprus Property Tax | Cyprus Capital Gains Tax | Bank of Cyprus | Mortgages in Cyprus | Purchase Contract | Cyprus Land Registry | Cyprus Chartered Surveyors | Making a Cyprus Will | Cyprus Title Deeds | Cyprus Certificate Final Approval
