Buying Property in Cyprus: Taxes, Costs, ROI, Maintenance, Residence Permit and Citizenship

Cyprus has long attracted investors and relocators from all over the world — thanks to its mild climate, favorable tax system and transparent rules for obtaining permanent residence and citizenship.

Below is everything you need to know before buying real estate on the island.

Taxes when buying real estate in Cyprus

1. Stamp Duty:

• Up to €5,000 — 0%
• €5,001 – €170,000 — 0.15%
• Over €170,000 — 0.20%

2. VAT:

• 19% — on new property
• 5% — reduced rate for the first 200 m² if purchased for personal residence and the applicant is an EU resident or permanent resident of Cyprus.

3. Capital Gains Tax:

• 20% on profits from sale, with possible exemptions (e.g. on the main house)

4. Property Tax: Since 2017, it has been abolished.

• Legal fees - 1%-2% of the cost
• Agency fee - usually paid by the seller
• Property registration - fixed fee
• Bank fees - if funds are transferred from abroad

On average, additional costs are 6%-10% of the property cost.

ROI: Rental Income

• Short-term rentals (tourist) — 5%–8% per annum
• Long-term rentals — 3%–5% per annum
• Popular locations: Limassol, Paphos, Larnaca (especially near the sea and tourist sites)
• Growing interest in mountainous and rural areas — due to ecotourism and affordability

• Utilities: €100–€300 per month (water, electricity, internet)
• Condo fee: €50–€150 per month
• Insurance: €200–€500 per year
• Rental taxes: 0% up to €19,500 of income per year for residents (EU)

Conditions for obtaining a VAT exemption:

• The applicant is an individual, not a legal entity
• The property will be his main place of residence in Cyprus. This can be an apartment, a house or a residential property under construction
• The applicant does not have another property in Cyprus acquired within ten years with a preferential VAT rate. After ten years, he can again obtain a tax exemption by indicating a new property as his main place of residence
• The property is used exclusively as a residential property and the applicant is the first to enter into actual possession of this property since the completion of construction
• The area of ​​the property does not exceed 200 square meters. Otherwise, the deduction will apply only to the first 200 square meters

The Cyprus Investment Program provides the opportunity to obtain permanent residence for investments in real estate from 300 thousand euros. In just two months, an investor can obtain permanent residence in Cyprus. Conditions: it is necessary to purchase primary housing from a developer worth at least 300 thousand euros.

At the same time, it is not necessary to permanently reside in Cyprus to maintain permanent residence status - it is enough to come twice a year. Permanent residence is indefinite, applies to family members of the investor and allows you to obtain Cypriot citizenship after five years, subject to all necessary conditions.

ADVANTAGES OF PERMANENT RESIDENCE IN CYPRUS FOR INVESTMENT

• Resident status in Cyprus in just two months.
• No government contributions, you only need to invest in real estate
• Permanent residence status is obtained by relatives of the investor, including the spouse, children under 25, the investor's parents and the spouse's parents
• It is not necessary to permanently reside in Cyprus - it is enough to visit Cyprus twice a year
• A soft tax regime. No taxes on income in other countries, no income tax, profit tax and inheritance tax
• The ability to come to Cyprus even if the borders are closed. At the same time, life in Cyprus is the right, not the obligation of the investor
• After five years, the opportunity opens to apply for European citizenship

Cyprus is one of the most attractive jurisdictions for those looking for sunny real estate, moderate taxation and the opportunity to obtain permanent residence. It is an excellent starting point for life in the EU, comfortable wintering or creating a portfolio of income-generating real estate.

It is important to study all aspects of the transaction in advance, including taxes, additional costs and maintenance of the property, as well as consider the long-term prospects for profitability and obtaining permanent residence. Sign up for a free consultation with Mercury Group experts.