After many discussions on the issue of the New Reduced VAT Rates Framework on real estate, it is finally set to come into effect from November 1, 2023 (Cy Law 42(1)/2023). This new legislation is aimed at providing incentives for homebuyers while also ensuring tax revenue for the government.
Let's delve into the details of this new VAT framework and how it will impact real estate transactions.
Under the new legislation, a tiered VAT system will be applied based on the size and value of the property. Here's a breakdown of the key provisions:
First 130 sq.m. with a Value of up to €350,000: For properties with an area of up to 130 square meters and a value of up to €350,000, a reduced 5% VAT will be imposed. This lower rate aims to make smaller, more affordable homes more accessible to buyers.
Properties from 131 sq.m. to 190 sq.m. with a Value of up to €475,000: Homes or apartments falling within this size range and with a value of up to €475,000 will be subject to a 19% VAT rate. In this case, the first 130 sq.m. will be taxed at 5%, and the remaining 60 sq.m. (up to 190 sq.m.) will incur a 19% VAT.
Properties Over 190 sq.m. and Valued Over €475,000: For larger homes or apartments exceeding 190 square meters and valued over €475,000, the VAT rate of 19% will apply from the very first square meter, irrelevance of value.
However, there are exceptions to this framework. The new regulation will not be applied in cases where a planning permit has been secured by the Department of Town Planning and Housing or, an application for planning permission has been submitted to the competent authority by 31 October 2023 and for which a duly completed responsible declaration (provided in the fourth subparagraph of paragraph (3) of Table C of the Fifth Annex-Law 42(Ι)/2023) within three (3) years from the date of entry into force of said law.
Buying a home is a significant financial investment, and the new reduced VAT rates on real estate aim to ease the financial burden on homebuyers, particularly for smaller and more affordable properties. At Triple I, we understand the importance of a lifetime investment and for this reason, we offer high-quality construction with consistent delivery timelines.
As the real estate market undergoes changes, we remain committed to providing our clients with the best possible real estate solutions.
For more information about our services, you can contact us at 7000 0509 or email us at info@tripleii.com
Photo by Sunguk Kim
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