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Property VAT

A law has been approved by the Cyprus Parliament imposing a 15% VAT charge on all new property, provided the initial application for a building permit was made after the 1/05/2004. All buildings that received the building permit prior to this date will have no VAT charge. Also all second-hand property including houses, apartments etc, have no VAT charge. Building plots/land are also exempt from VAT until the year 2007.

 

Special regulations, which will treat the purchase/ building of a permanent residence to a lower VAT charge (5%) has been recently passed by the Government. In order to be eligible for the return of 10% of VAT (out of the 15%), the following criteria must apply:

  1. The property is to be used as a permanent home.
  2. The building license should be after the 01/04/2004.
  3. Must be over 18 years old.
  4. National of Cyprus or any other EU member who is permanently living in Cyprus. To be a permanent citizen of Cyprus you must stay in Cyprus 183 days per year.
  5. You have no other property in Cyprus that is used as a permanent residence.
  6. The person claiming the return of VAT must be living in the house and use it as a permanent residence.
  7. Must produce proof in the form of written documentation such as telephone, electricity, water, tax bills.

The recently passed legislation regarding the return of VAT for the first purchase of a house/flat or construction of a property as follows (The refund is calculated by taking the area of the house/apartment, multiplied by the purchase price per  m² multiplied by Value Added Tax rate of 15/115 and multiplied by the 10/15 refund rate.) :

 

Purchase of property Cost/m2 Area in Return of 10% VAT
Flat 1-bedroom 950 65 5370
Flat 2-bedroom 950 100 8260
Flat 3-bedroom 875 130 9891
Flat 3-bedroom 875 150* 9891
Detached house 1000 200* 11304
Semi-detached house 750 200* 8478
Building a house
Building a house 500 130 5652
Building a house 500 250* 5652
Building a house 500 300* 0

 

*Note: The return of the VAT is suggested for the houses with an area of up to 250 m², but the VAT us returned on the area of up to 130 m² only. If you build a house of more than 250 m² then no VAT is returned at all, as you are judged to be not in the economic zone that needs the incentive.

The area is calculated on the total covered area if the property, including store rooms, covered parking, covered verandas and excluding:

  • Up to 5 m² - engine / boiler room
  • Up to 7 m² - storerooms
  • Up to 36 m² - covered parking
  • Up to 40 m² - covered verandas

These measures are for applications for a building permit that have been deposit with the appropriate Government Department after the 01/05/2004.


Above information is prepared using the materials of "Property&Home - Cyprus" magazine.

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