VAT refund on housing set for April 13 vote

The House of Representatives is expected to vote on the VAT refund on first-time house purchases at its last session on April 13 before it dissolves ahead of the May 21 parliamentary elections.

During the House Finance Committee discussions last week, deputies agreed to scrap the draft bill on a lower VAT rate for first time purchases and replace it with a special grant for all first time home buyers who wish to stay permanently in Cyprus.

The original legislation that gave a refund on houses up to 200 sq. metres is now set to expand to 298 sq. metres, which will include the covered areas, parking, boiler room and storage areas.

According to the new proposal, persons eligible to apply for the grant are those whose building applications were made after May 1, 2004, who are over 18 years old, permanent residents of Cyprus and who don’t own other property.

In order to qualify, those who receive the grant should hold the property for at least ten years, otherwise they will have to return the grant. The bill provides for up to 250 sq. metre covered area, plus 36 sq.m. for parking space, 5 sq.m for boiler room and 7 sq.m. for store rooms. The grant is calculated on 130 sq.m. basic area, but for every family with more than three children, there is an additional provision of 15 sq.m.

The amount of the grant will depend on the type of the property purchased and its size, based on the 130 sq.m. calculation. The amounts are as follows:

1- CYP 500 per sq.m. for buildings under construction.

2- CYP 950 per sq.m for purchase of one bedroom flat.

3- CYP 950 per sq.m for purchase of two bedroom flat.

4- CYP 875 per sq.m for purchase of three bedroom flat.

5- CYP 750 per sq.m. for purchase of semi-detached house.

6- CYP 1000 per sq.m. for independent house.

The refund is calculated by taking the area of the house/flat, multiplied by the purchase price per sq.m, multiplied by VAT rate of 15/115 and multiplied by the 10/15 refund rate.