Benefits of changing VAT policy on homes
The text discusses a proposal to fully suspend VAT on houses in Cyprus, similar to Greece’s 0% VAT rate on new homes. The author recommends a temporary suspension of VAT or a super-reduced VAT rate for homes used as the main residence. The author also suggests revising the policy to include home size criteria and family size. The potential benefits of this policy include a surge in demand and supply for newly built properties, stabilizing prices faster, making resale properties more affordable, and correcting rental values. The author also proposes revising the definition of “new” and “old” properties and increasing transfer fees for second property purchases to compensate for the temporary VAT loss. The author argues that adjusting VAT for homes can support citizens in affording homes without negatively impacting public finances and can enhance both individual well-being and overall economic stability.