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Renting-out the property

EU Citizenship by Investment. Renting-out the Property - is it allowed?

October 2018: As an applicant for residency or citizenship, can I rent out my property when I am not there?

Answer: The short answer is "it depends on the country" - some allow this practice, while others do not.

Here is the long answer. Many countries require you purchase or lease a personal residence as a condition when applying for residency or citizenship. And so especially in countries that don't have any minimum stay requirements this seems to open up an opportunity to rent out the property and make some money for the weeks or months that the applicant is not present.

However, renting your primary residence is disallowed in most countries, with Greece being one notable exception (in Greece you may rent out the property right away).

Of the countries that prohibit this practice, some clearly spell this out, whereas others, such as Cyprus, are less direct - which some have interpreted as meaning its ok to do so (it is not).

Let's look specifically at Cyprus as an example because the situation seems to be somewhat murky here.

Applicants for residency must invest a minimum of EUR 300,000 into a "first sale" property to be used as the applicant's primary residence. The Value Added Tax for these purchases is 5%, which is a special rate to attract investors (the standard rate is 19% VAT).

Some firms now suggest to their clients that buying the property not at the special 5% rate, but at the full 19% rate, somehow means the investor does not fall under the rules, and because the rules don't apply the investor is allowed to freely rent out the primary property - which in our assessment is simply not true.

If you are applying for Cyprus residency, and if you want to be in full compliance, then the only way to generate rental income would be to buy a second investment property (at full 19% VAT) which you may rent out as much as you want. (By the way; the Cyprus citizenship program has different rules which make it easy to split your investment between a personal and income generating properties.)

Another approach suggested by some firms in Cyprus that we have heard about is "where there is no judge there is no executioner", which essentially is to say "just do it, go ahead and rent out your primary residence, nobody will notice". But this too is dangerous, because if you are found out you might jeopardize your residency application or lose your residency status. Ask yourself - is that really worth it?

If you have questions about these rules, or if you have been advised that it is lawful to rent out your primary residence in Cyprus please contact us - we'd like to speak with you.

Because immigration by investment programs can change over time please contact us to speak with an advisor or to receive a preliminary quotation. The information provided in this blog post is intended for educational and informational purposes only. It should not be construed as legal or financial advice.

Click here for the Malta citizenship by investment program. Click here for the Malta residency programs.

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