The most common housing fraud schemes in Cyprus: what foreign property buyers need to know

The most common housing fraud schemes in Cyprus: what foreign property buyers need to know

Cyprus attracts the attention of foreign investors not only by its affordable prices but also because of the possibility of getting a residence permit. To obtain it, it is enough to buy a house worth €300,000 or more.

However, local realtors note that unscrupulous cases of deception of future homeowners are becoming more frequent. We are talking about the fact that during the discussion of the transaction, it is stated that in order to obtain a residence permit, the real value of the property is important rather than the amount of the purchase. Intermediaries and sellers try to convince applicants that a lower price means a lower transfer fee in their favour, without informing them that in the case of resale, the capital gains tax will be higher.

The whole situation is fundamentally flawed because, whatever the goals of an unscrupulous agent, such statements do not contribute in any way to obtaining state authorisation to apply for a residence permit. There is active talk that the Ministry of the Interior should issue a directive on this matter, clarifying its position on the ratio of value to purchase price.

Another example of fraudulent actions are artificial overpricing by lawyers and accountants who take over the process of obtaining visas. Therefore, it is advisable to consult several organisations before starting the process, as the fee for legal services for obtaining a residence permit can be as high as €2,500 or as high as €7,500.

Commission payments for the buyer is a separate topic for discussion. There is a case where one adventurous agent successfully negotiated with an investor on the purchase of a house for €1.8 million. At the same time, his commission amounted to €800,000 of this amount. If the authorities do not approve such a commission, the seller will have to pay tax not on €1 million but on the full amount. This is why it is so important to use the services of reliable real estate agents.

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