Investing in property is one of the criteria to participate in Cyprus' citizenship by investment program. There is no requirement to stay permanently in Cyprus. The requirement for citizenship is to maintain the investment for a period of three years and a residential property for life. Renting those properties and generating income is possible and allowed under the terms and conditions of citizenship. Currently, demand for rentals has increased, especially during tourism season. Properties in Paphos may be rented out short term or long term.
How can I use properties in Cyprus to participate in the citizenship by investment program?
We are contemplating purchasing two residential properties in Paphos so we can obtain a passport. We are not planning to reside in Cyprus and would like to derive income from the properties. How would I be able to do this? What is the demand for rental properties in Cyprus? Is Paphos a good location for rental properties?
You are not required to reside in Cyprus in order to retain your citizenship. You are therefore allowed to rent your properties in Cyprus and to sell them (except from the one that will be used as your permanent privately-owned residence with a value of at least €500,000) after three years from the date of naturalization. There is an increasing demand for rental properties, especially for properties in attractive locations and there are great choices to receive a good return on investment. Paphos offers the best investment locations, with attractive places such as Kato Paphos, Tombs of the Kings, Coral Bay, Sea Caves, Peyia, Aphrodite Hills, Latchi and Tala. It provides excellent rental returns.
As a lawyer I cannot advise on the potential of investment return or rental income. What I am able to advise you is that you may rent both your properties in order to derive income. If, however, you have claimed a VAT refund on one of the properties (something for which you are eligible as a purchaser of a new property), you are not permitted to rent the property for which you have obtained a refund, as this is considered to be your residential home in Cyprus. You may, however, rent your second property.
In reply to your email below, please note that according to the scheme for naturalization of investors in Cyprus by exception on the basis of subsection (2) of section 111A of the Civil Registry Laws of 2002-2015 of the Civil Registry Laws of 2002-2015, one of the criteria is investment in real estate, land development and infrastructure projects. The applicant must have made an investment of at least 2 million euros for the purchase or construction of buildings or for the construction of other land development projects (residential or commercial developments, developments in the tourism sector) or other infrastructure projects. It is noted that investment in land under development is included in this criterion, provided that an investment plan for the development of the purchased land will be included in the application. It is understood that investment in land that is situated in a building zone of zero development is excluded. Furthermore, the applicant must possess a permanent, privately owned residence in the Republic of Cyprus, the purchase price of which must be at least 500,000, plus V.A.T. In case that the purchase value of the permanent privately owned residence in Cyprus exceeds the amount of 500,000 euros, part of this additional amount can be used for purposes of supplementing the total amount of the investment made on the basis of the criteria mentioned above. Additionally, it is noted that if the applicant has invested in housing unit/units on the basis of the aforementioned criterion, i.e investment in real estate, land development and infrastructure projects, the purchase of another permanent residence in Cyprus will not be required if at least one of these housing units is worth at least 500,000 euros, plus VAT, provided that the applicant retains the possession of the residence for life. Provided the applicant is successful, there is no requirement to reside in Cyprus and it is possible for the investment(s) to be rented. As far as the rentals are concerned, please note that this is out of our field. Therefore, it is best that you require the input of an estate agent and/or a property valuer as far as this is concerned.