Permanent residence incentives: a great injustice
By George Mouskides
Back in May, the government amended the relevant regulation offering incentives to foreigners to acquire a permanent residence permit in Cyprus.
All foreigners who buy a brand new property or two from the same developer and fulfil some other requirements are entitled to permanent residence within a couple of months.
There is a simple question which begs to be asked: Why does this only concern new properties? Is it designed to bail out land development companies in dire economic straits?
Or is it perhaps because the government wrongly believes that the sale of a new property heats the economy more than the sale of an older property would?
To begin with, the incentives are a great injustice to used property owners trying to sell.
It also has to be taken into account that foreigners wish to buy a house with a title deed to be sure that they own what they’ve paid for. It is well known that new properties acquire a title deed 2-4 years after completion.
What is even more important is that the government stands to earn more from the sale of a used property as new houses have a 5% VAT whereas used ones pay 8% transfer fees, (for values over 170.000 euros).
If we are to consider a new property selling for 300.000 euros, the VAT would be 15.000 euros, while a used property of the same value would reap in 17.200 euros for the government.
And guess what. If the used property is not sold, its owner will never need to buy another property to replace it, so nobody wins.
SPOILED FOR CHOICE
Another factor to consider is that if foreign investors had the option to buy new or used properties they’d be spoiled for choice. Most of the new properties available now were built with British and Russian investors in mind. We cannot be at all sure they will be suitable or attractive to Chinese, Israeli, Egyptian, Lebanese or Iranian investors.
The government must act quickly to include used properties with title deeds in the relevant regulation.
For more information on this matter and further guidance on these regulations, call us on 800 800 82.
George Mouskides is General Manager, FOX Smart Estate Agency and a Licensed Estate Agent, US Certified Public Accountant.
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