How much is VAT for properties in Cyprus?
Cyprus VAT Payable on Property:
Since Cyprus’ EU accession in 2004, a standard VAT rate of 19% is required to be paid when buying a new property.
However, following a recent VAT Amendment Law, a reduced VAT rate, starting from 5%, is applicable for the acquisition of new residential properties.
For the reduced rate to be in effect, certain terms and conditions must be met:
The property must be used as the primary and permanent residence of the applicant (for the next ten years).
The applicant has not acquired any other residence in Cyprus with a reduced VAT rate.
The applicant must be an individual, over 18 years old, thus legal entities are excluded.
The reduced VAT rate of 5% is applied on the first 200 square meters (building coefficient) of the property as per the architectural plans submitted to the Authorities. On the remaining square meters, the standard rate of 19% is imposed.
What is the exact Buying Process?
At Invest Cyprus, we strive to make the property purchase process as straightforward and smooth for you as possible. Our professional assistance and guidance from start to finish will ensure that you feel supported at every step and are completely satisfied with your final decision. The following steps outline the purchase process:
STEP 1 – DECIDING TO BUY
Whether you are deciding to purchase for investment, relocate to Cyprus, or are looking to acquire Permanent Residency through the purchase of real estate, careful and considerate planning is essential to ensure that you choose the right property for the right reasons.
STEP 2 – REGISTERING YOUR INTEREST
Once you register your interest with us, it will become clear that we are here to support you. Whatever your circumstances are, our dedicated team will take the time to listen to your needs and priorities in order to obtain a clear picture of your requirements, whilst answering any questions or concerns you may have.
STEP 3 – PROPERTY SELECTION
After discussing in depth your individual property needs with one of our committed sales advisors, we will then be able to establish which options are best for you and provide a shortlist of properties most suited to your individual needs. Viewing of properties and locations can be arranged and we are happy to show you the highlights of the local area in order for you to get a better feel for the location you wish to purchase in. It is also possible to choose and reserve a property from abroad.
STEP 4 – PROPERTY RESERVATION & PAYMENT OF A RESERVATION DEPOSIT
Once you have decided on a property, the purchasing process starts with the completion and signing of a reservation agreement. The final price will be agreed, along with and other conditions of purchase. All agreements must be made in writing and included on the reservation agreement. A deposit will then be required to withdraw the property from the market and reserve it in the name of the prospective purchaser. We will be able to professionally advise and assist you on the best purchase strategy based on your circumstances.
STEP 5 – PREPARATION OF THE CONTRACT OF SALE
The COS will be prepared by a lawyer with full experience in property-related matters. As part of the legal process, your lawyer will confirm your details, arrange the paperwork, confirm any special arrangements related to the purchase and carry out their own searches and checks on the property before proceeding with preparing the contract.
STEP 6 – SIGNING OF THE CONTRACT OF SALE
Signing of the COS by both parties can take place when the following have been agreed and confirmed in writing: Property purchase price, terms of payment, fixtures and fittings to be included in the purchase and any other items/installations agreed.
STEP 7 – SUBMISSION OF THE CONTRACT OF SALE TO THE LAND REGISTRY DEPARTMENT
Once both parties have signed the COS, it must be stamped and deposited at the Land Registry department within 180 days. This process is called ‘specific performance’ and confirms that a specific property is registered in the name of the new owner. Once the contract is submitted, you are officially the owner of the property.
STEP 8 – COMPLETION OF THE SALE
If you have purchased an off-plan or partially constructed property with us, we will keep you fully informed with the progress of the property until completion. Approximately one month before your property is complete, we will send you a formal notice of completion. Once we receive the final payment for your property, we are able to arrange the delivery and key hand over. If you have purchased a completed property with us, delivery will be arranged as soon as the full payment is received in our account.
STEP 9 – ISSUE OF SEPARATE TITLE DEEDS
Once an individual property or development is completed, the Land Registry Office issues separate title deeds and transfers the deed for each unit within a development to the purchaser(s). This process normally occurs within 3-4 years from the completion of a project.