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Cyprus property investment – Key benefits

By Marios Konstantinou

Updated: April 28, 2024

Investing in a property portfolio in Cyprus can be a profitable opportunity. Investors worldwide, including those from European Union countries, are constantly investing in the island. Property sales in Cyprus for 2023 reached a total of 4.399 billion, an increase of 216 million from 2022 and 1.208 billion from 2021.

Given the island's current recovery of its construction industry, now is the ideal time to invest. This article will examine the main benefits investors enjoy 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, investors can apply for citizenship in Cyprus after five years of residing on the island. Therefore, they will become Cypriot citizens and European Union citizens. The residency gives the right to stay, open a company, and do business in Cyprus.

Finally, investors buying their first property for residency can also benefit from a reduced VAT rate. If the property is the investor's primary residence, they can pay 5% VAT instead of 19%. The VAT reduction will only apply to 130 square meters of internal covered areas. Any area over 130 square meters is taxed at the standard rate of 19%.

Third-country nationals require permission from the Council of Ministers to purchase property in Cyprus. This simple process involves completing a form, and the Council of Ministers will not refuse permission to applicants acting in good faith.

Benefits of getting a Cyprus residence permit through property investment

Having a residence permit in a country that is a member of the EU and the Eurozone is advantageous. It allows enjoying almost the same benefits as European citizens.

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

The corporate tax is 12.5% on profits, one of the lowest in Europe. Investors can also enjoy non-domicile tax residency benefits, which grant 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.

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

Attractive rental income prospect

Buying a property in Cyprus in 2024 is considered a good investment. There is increased demand for property rentals. The demand is very high, especially in Limassol, one of the most popular locations.

Property rental yields in Cyprus range 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) has been increasing annually for the last three years. The long-term appreciation of real estate prices makes it one of the safest investments currently available.

Protection against inflation

As inflation rises, property values follow, so an owner's rental income can also increase. The actual value of the asset also increases with the inflation rate. Many investors use real estate investing as their first option against inflation.

Cyprus rental income taxes involved

There is a favourable tax regime for individuals and businesses on the island. 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 it out.

For non-tax island residents, rental income is only subject to personal income tax. Twenty per cent of rental income is exempt from any tax. More importantly, the remaining rental income is taxed only after all other allowable deductions are made. 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, levied on rental income.

Reasonable property prices

As of April 2024, the median apartment price in Cyprus is € 550,000, with the median price per square meter around € 4,371. The median house/villa price is € 670,000, with the median price per square meter around € 3,209 (data source - Cyprus property investment guide by DevelopersCyprus).

Residential property prices differ between towns, as they do in most European countries. This is because of the demand for seaside properties, luxurious villas, and vacation properties or holiday 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. The Cyprus real estate market and prices are generally expected to remain stable or increase this year.

Residential construction activity in Cyprus

Significant is the fact that Cyprus construction activity shows considerable recovery. Construction output rose by 7,4% year-on-year in the second quarter of 2023. According to CyStat, the output of construction and real estate activities to GVA (Gross Added Value) is increasing for the second quarter of 2023. Eurostat data shows that the number of employees in construction has reached an all-time high for June 2023. 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. Currently, 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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