Cyprus property investment – Key benefits

Updated: May 30, 2023

Starting a property portfolio in Cyprus can prove to be a serious investment opportunity. Property hunters worldwide, including investors from European Union countries, were continuously investing in the island.

Given the current recovery of the island's construction industry, now is the ideal time to invest. This article will examine the main benefits enjoyed by investors when investing in property in Cyprus.

Cyprus property investment visa

If a foreign national invests 300,000 Euros, he/she can get a permanent residency visa. He/she may purchase:

  • a brand new house/apartment, or
  • purchase offices, shops, and other commercial property, which can also be resale

Also, the investor must show that their income comes from abroad.

It is an excellent opportunity for any investor to secure a residency permit in Cyprus. Additionally, the investor can apply for Cyprus citizenship after five years of residing on the island. Therefore he will become a Cypriot citizen and also a citizen of the European Union. The residency gives the right to stay and also open a company and do business in Cyprus.

Finally, investors buying their first property for residency purposes can also benefit from a reduced VAT rate. If the property is the investor's primary residency, they can benefit from paying 5% VAT instead of the usual 19%. The VAT reduction will only be applicable for the first 200 square meters of internal covered areas. Any area over 200 square meters is taxed at the standard rate of 19%.

Benefits of getting a Cyprus residence permit through property investment

It is an advantage to have a residence permit in a country member of the EU and the Eurozone. It allows enjoying almost the same benefits as European citizens.

Investors who acquire the residence permit will be able to do business on the island. Thus they can enjoy the tax advantages and the free movement of services and goods.

The corporate tax is set at 12,5 % on the profits, which is one of the lowest in Europe. Also, the investors can enjoy the non-domicile tax residency benefits. This grants them the right to receive their dividends without any tax imposed.

High-quality education and social protection

The level of education is very high in the country. There are many international English-speaking schools and universities. Also, many UK universities have opened their branches in Cyprus.

Also, Cyprus is considered one of the safest countries globally, an ideal place for a family.

Attractive rental income prospect

Buying a property in Cyprus in 2023 is considered a good investment. There is increased demand for property rentals. Especially in Limassol, in the most popular locations, the demand is very high.

The property rental yields in Cyprus are from 4% to 6%, depending on the real estate type and location. There is demand for both residential and commercial properties.

Appreciating value

According to the Central Bank of Cyprus, the house price index (CPI) shows an annual increase for the last three years. The long-term appreciation of real estate prices makes them one of the safest investments currently available.

Protection against inflation

As inflation rises, the property values follow. So the rental income of an owner can also be increased. Also, the actual value of the asset is increased with the inflation rate. Many investors use real estate investing as their first option against inflation.

Cyprus rental income taxes involved

There is a favorable tax regime for both individuals and businesses located on the island. When compared with other countries worldwide, the taxation of rental income in Cyprus is very low. Thus you may purchase the required real estate and rent out your property.

For non-tax residents of the island, rental income is only subject to personal income tax. Twenty percent of rental income is exempt from any tax. More importantly, only after all other allowable deductions are made is the remaining rental income taxed. The first €19.500 is not subject to any tax.

On the contrary, tax residents of Cyprus (domiciled) are also subject to Special Defence Contribution, which is levied on rental income.

Reasonable property prices

Residential property prices are different between towns which also happens in most European countries. This is because of the demand for seaside, luxurious villas, and vacation properties or holidays homes.

For example, prices in Limassol tend to be higher than property prices in Paphos and Larnaca, Nicosia, or Ayia Napa. The reason is the increased demand for such properties in the city.

During the pandemic, despite the decreased demand by international buyers, the domestic property market kept prices stable. The government provided incentives, which raised the domestic demand. It is generally expected that the Cyprus real estate market and prices will remain stable or increase this year. Especially in Limassol, in the best locations, there are already increases in property prices.

Residential construction activity in Cyprus

Significant is the fact that Cyprus construction activity shows considerable recovery. Building permits have increased during 2021, which offers good potential for the construction industry's future. A stable and successful construction industry provides overseas investors with numerous economic opportunities.

Property investment – the right timing

Consequently, Cyprus provides numerous opportunities for individuals who wish to invest in immovable property. At this time, the construction sector is powerful and worth taking advantage of. Furthermore, the legal system and tax regime will always benefit those wisely prepared to invest in Cyprus property.

What is of most importance is to take the appropriate legal, financial planning, and property advice. Local professionals will be the most appropriate advisors to employ if you seek advice from experienced, talented, and committed individuals.

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