Buying real estate in Cyprus through escrow: how not to lose money and save on taxes

Why Cyprus? Housing prices in Limassol have increased by 11% in 2025, with rental yields in Paphos reaching 6.5% per annum. The program “Purchase of real estate → Residence permit in 30 days” remains the main magnet for foreigners. But the main problem is non-transparent payments between the buyer and the developer. Case study from Hazon Capital A client from Ukraine chose an apartment in Limassol for €350,000. The developer offered direct payment “without extra fees.” We insisted on an escrow account in a Cypriot bank. And for good reason: after 2 months it turned out that the developer had debts to subcontractors of 80,000 €. Escrow protected the client's money - the transaction went through an independent agent, and the funds were transferred only after registration of ownership. Tax optimization When purchasing a new building in Cyprus, you pay 19% VAT (or a reduced 5% for the first home up to 200 m²). But if you complete the transaction through a Cypriot company (private or family), you can: refund part of the VAT for commercial use (Airbnb or long-term rental); apply tax deductions for depreciation (up to 3% of the cost per year); when selling after 5 years, pay capital gains tax not 20%, but 0% (for legal entities with a certain structure). Step-by-step scheme for a secure transaction Selecting an object → checking legality (Zoning, encumbrances, mortgage register). Opening an escrow account in a regulated bank (Hellenic Bank, Bank of Cyprus). Signing a purchase and sale agreement with an escrow condition. Transfer of funds → the bank blocks until the conditions are met. Registration in the Land Registry → automatic release of money. Receipt of keys and Certificate of Ownership (after 2–6 months). Important Warning Some agents offer “gray escrow” through unverified platforms. This results in funds being frozen for 6–12 months. Work only with banks that have a license from the Central Bank of Cyprus and insurance up to €100,000. Summary from Hazon Capital Escrow is not an expense, but insurance. With us, you save on lawyers (we include verification in the package) and receive a tax plan for your type of residence. The average client savings is 15,000 € on an object of 300,000 €.