Subsidy for Purchasing a New House

Subsidy for purchasing a new house in Cyprus

George Coucounis explains about the special subsidy provided for purchasing or building a new house in Cyprus in lieu of non-decrease on VAT.

A special subsidy is provided by the law for purchasing or building a new residence to be used as a main, permanent residence due to the lack of a decrease on VAT. This subsidy is a social measure provided for the purchase, construction or transfer of the possession of a building, as long as the building in question is to be used as a main and permanent residence. It is a subsidy in a lump sum granted to any person entitled to it if he is over the age of 18, he is a Cypriot or EU citizen and he permanently resides in Cyprus without using any other main or permanent residence. A married person is entitled to apply for this subsidy only once. There are some requirements when applying for this subsidy, i.e. the application for the town and planning permit must have been filled with the relevant authority after 1/5/2004, the residence must be used as a main, permanent residence and its size to be no more than 250 m².

A specific form is used for the subsidy application, which is available at the Grants and Benefits Service or at the District Offices and the following documents must be included with it: copies of a telephone bill, a water bill, an electricity bill and municipality or community tax bills, copy of a town planning permit, other documents proving the purchase or the construction of the residence such as the sale contract, receipt for the payment of the deposit, application or approval for a house loan, price lists or payment receipts, a certificate by an architect or civil engineer for the total size of the residence, copies of the identity card, the marriage certificate and the birth certificates when it comes to families with more than three children. The relevant application is sent to the Permanent Secretary of the Ministry of Finance, or it is delivered to the Grants and Benefits Service, to the Ministry of Finance, to the Citizen Service Centres or the District Offices of Limassol and Larnaca.

This special subsidy is based upon the provisions of Law 91(I)/2006, retrospectively since 1/5/2004 and it is calculated according to the Appendix of the law, thus the residence size multiplied by the price per square metre as defined by the law, readjusted each year according to the price index, multiplied by the subsidy and the VAT fraction. The following examples are provided in the law:

Purchase of property Cost
Return of 10% VAT
Flat 1 bedroom £950 65 £5370
Flat 2 bedroom £950 100 £8260
Flat 3 bedroom £875 130 £9891
Flat 3 bedroom £875 150* £9891
Detached house £1000 200* £8863
Semi-detached house £750 200*  
Building a house      
Building a house £500 130 £5652
Building a house £500 250* £6304
Building a house £500 300* £15217
Purchase of a house from a family with 4 children £500 250 (grant for 145) £6304
Purchase of a house from a family with 6 children £1000 250 (grant for 175) £15217

* The return of the VAT applies for houses/flats with a size of up to 250m², but the VAT is refunded only on the size of up to 130 m². If one purchases or builds a residence of more than 250 m², then no VAT is refunded since the person is considered as not of the economic zone that needs the subsidy.

Note that VAT at 15% will be charged on land acquisition, starting from January 1st, 2008.

In calculating the size of the residence, all the covered areas are included as well as the following:- engine rooms, storeys, covered parking areas and covered verandas, with an exception of up to 5m² size for the engine rooms, of up to 7 m² for the storeys, of up to 36m² for the covered parking areas and of up to 40m² for the covered verandas. When it comes to families with 4 children or more, there is an addition to the size of the residence of up to 15 m² for each child over the third one, as stated on the above table. The amount of the subsidy is readjusted annually based upon the price index. There are also a number of restrictions, one of which is that a person who has already applied for a subsidy cannot apply for a new one, unless ten years of his previous application have passed.


George Coucounis is an experienced lawyer practicing in Larnaca, Cyprus.

Educated at University College (London) and Thessaloniki University (Greece), George is fluent in English and has been practicing law in Cyprus since 1982.

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