Experts estimate that if changes are introduced by the end of 2020, the market will recover by 2021-2022.
The importance of the Cyprus Citizenship for Investment programme and its positive impact on the real estate market is stressed. Of the 5 proposed measures, 3 are aimed at stimulating investor interest.
- Exemption from the capital gains tax
Experts proposed to exempt from capital gains tax real estate, which will be acquired by the end of 2021. It is assumed that the tax benefit should be transferred from parents to children together with the object.
Such privilege was already introduced in 2015, then it was valid until the end of 2016 and stimulated the growth of the real estate market. Experts believe that the reintroduction of this measure will increase the commercial interest of investors in real estate in Cyprus.
- Change in the definition of "old" property
Experts suggested changing the definition of "old" property. Now in Cyprus these are objects that have been in possession for over 10 years. Now it is proposed to declare the "old" all real estate, which is in possession of more than 3 years.
Shortening the border term of ownership will have several advantages.
- Owners will be able to sell or rent out the property without paying VAT long before the expiration of 10 years. No need to pay tax will increase the liquidity of the objects and the number of transactions on the real estate market.
- Buyers will have a wider choice of quality facilities - with a shorter service life.
Thus, this measure will smooth out the negative impact of the EU VAT policy on the Cyprus property market.
The experts are oriented towards the experience of other countries, such as France. In this country, the term of ownership to achieve the status of "old" property is 5 years. In some other EU countries, it actually lasts 2-3 years.
- Increase in the discount on bank transfer fees up to 70%
Also in the report, experts suggested increasing the discount on transfer fees from 50% to 70%. The new amounts of fees should be valid until the end of 2021.
The previous commission discount - 50% - became effective from 2015. The decrease in price by another 20% will make investors' payments more comfortable
If these 3 measures are taken, participation in the Cyprus citizenship programme would be even more beneficial
Why is the citizenship program important for the real estate market
The program provides for mandatory purchase of real estate - it stimulates market growth. Therefore, real estate experts note how important it is to spend efforts on its development, in particular, to attract applicants from other continents.
Experts note that the Cyprus investment program began to bring much more benefits to the country's economy after changes in 2016. Then instead of collective investments of €12 million, there was an option with personal investments of €2 million. This change was enough to overcome the echoes of the crisis in the economy of Cyprus in 2013.
Earlier we said that Cyprus is in first place in the list of attractive tax residences for Russians. It is also among the top 3 countries where Russian citizens prefer to open accounts.
To a large extent, this popularity of Cyprus among wealthy people is due to citizenship for the investment programme. Recently, the Cabinet of Ministers submitted amendments to the rules of the program to Parliament - they provide for enhanced Due Diligence.