Cyprus offers a unique combination for real estate investors: no annual national property tax, no inheritance tax, no wealth tax, and for non-dom rental income, zero Special Defence Contribution. The 20% capital gains tax on property disposal is real but can be managed with the right structure and long holding periods.
Cyprus is the only EU country with no national annual property tax, no inheritance tax, and no wealth tax, making it one of the lowest-cost jurisdictions in Europe for long-term property holding.
This guide covers the full tax picture for real estate investors in Cyprus in 2026.
Capital Gains Tax on Cyprus Property: 20%
Cyprus applies 20% capital gains tax (CGT) on profits from:
- Disposal of immovable property located in Cyprus
- Disposal of shares in companies where value derives primarily from Cyprus immovable property
This applies to both residents and non-residents. There is no capital gains tax on shares in operating companies or other financial assets.
How CGT is Calculated
Sale price
- Original purchase price (adjusted for inflation via CPI)
- Qualifying improvement costs (receipts required)
- Transfer fees paid on original acquisition
- Legal fees on original acquisition
= Net gain
× 20% = CGT payable
Indexation for inflation significantly reduces the taxable gain on long-held properties. A property purchased in 2005 would have its base cost uplifted by the official Consumer Price Index from 2005 to the date of disposal.
Lifetime CGT Exemptions
| Exemption | Lifetime Limit |
|---|---|
| Primary residence (5+ years of occupation) | €85,430 |
| Agricultural land | €25,629 |
| Inherited property disposal | €85,430 |
These are lifetime totals across all qualifying disposals, not per-transaction amounts.
CGT-Free Transfers
- Gifts to spouse or children (CGT deferred to eventual disposal)
- Transfer on death/inheritance
- Reorganizations within group companies
- Gifts to charities or the government
Rental Income Tax for Non-Doms
| Tax | Non-Dom | Domiciled Resident |
|---|---|---|
| Income tax | Progressive 0 to 35% | Progressive 0 to 35% |
| Special Defence Contribution | 0% | 3% |
| GESY | 2.65% | 2.65% |
Example: €30,000 Annual Rental Income (Non-Dom vs Domiciled)
| Item | Non-Dom | Domiciled |
|---|---|---|
| Gross rental income | €30,000 | €30,000 |
| Deductible costs (repairs, management, mortgage interest) | €8,000 | €8,000 |
| Net taxable income | €22,000 | €22,000 |
| Income tax (within €22k threshold) | €0 | €0 |
| SDC | €0 | €900 (3%) |
| GESY (on gross) | €795 | €795 |
| Total tax | €795 | €1,695 |
GESY on rental income is reported and paid twice yearly: 30 June and 31 December, via TAXISnet.
VAT on New Property Purchases
When purchasing new property directly from a developer:
- Standard VAT rate: 19% on the purchase price
- Reduced rate: 5% on a primary residence. Under the current framework the 5% rate covers the first 130 sqm, capped at a property value of €350,000, with a total buildable area limit of 190 sqm and a total transaction value limit of €475,000. Above those limits the 19% rate applies to the entire price. The buyer must use the home as a genuine primary residence and must not have claimed the relief on another property.
An older transitional rule (5% on the first 200 sqm, with no value cap) can still apply where the planning permit was issued or applied for by 31 October 2023. The filing deadline then depends on the building permit date: 31 December 2026 where it was issued after 1 January 2025 or has not been issued yet, but 15 June 2026 (now passed) where it was issued on or before 31 December 2024. Check which applies before assuming you still have time (see our news brief: Cyprus extends the 5% first-home VAT relief).
Which sales attract VAT at all (changed 1 September 2026)
Whether a building sale is a VATable supply or an exempt one is decided by a test that changed on 1 September 2026 under decree R.A.A. 103/2026, which amended the Eighth Schedule of the VAT Law.
- Until 31 August 2026: VAT applied where the transfer happened within five years of completion and the building had not been in continuous use by an unrelated party for at least 24 months.
- From 1 September 2026: VAT applies only where the supply takes place before first occupation. Once first occupation is achieved, the sale falls under the general immovable property exemption.
First occupation is the first use of the building after construction or delivery, including owner occupation, leasing or any other systematic use. First use is systematic use or exploitation for a period of at least 18 months, and that 18-month period is the practical hurdle: a unit let for a few months and then sold has not cleared it, so that sale is still VATable. See our news brief: Cyprus VAT on property sales, the new first-occupation test.
For a normal purchase this changes nothing about the rate. A genuine resale from a private owner who has lived in the property for years still carries no VAT, and transfer fees apply instead, exactly as before. Two separate rules produce that result and it is worth keeping them apart: a private individual who is not acting as a taxable person in the course of a business is outside the scope of VAT in the first place, and separately a supply made after first occupation is an exempt supply. What the new test changes is the boundary cases: newly built stock that has had partial, short or interrupted use, and anyone selling in the course of a business.
Renovation of an older home is governed by R.A.A. 102/2026 alone, the Fifth Schedule amendment; R.A.A. 103/2026 changes only the Eighth Schedule supply test and carries no renovation provisions. The 5% reduced rate on renovation and repair work to a private dwelling now requires that at least three years have elapsed since first occupation and that the 18-month systematic-use condition is met.
Stamp duty on property contracts: abolished from 1 January 2026. The 2026 tax reform repealed the Stamp Duty Law, so contracts signed on or after that date carry no stamp duty.
Transfer Fees at Land Registry (Resale Properties)
| Market Value Tranche | Transfer Fee Rate |
|---|---|
| Up to €85,430 | 3% |
| €85,431 to €170,860 | 5% |
| Above €170,860 | 8% |
Where VAT was paid on purchase (new property from developer), transfer fees are reduced by 50%.
Exemption: Transfers between spouses and first-degree relatives are transfer-fee exempt.
Personal vs Company Ownership
Personal Ownership
Pros: Simpler, lower annual compliance, access to €85,430 CGT lifetime exemption on primary residence, more straightforward mortgage financing.
Cons: Personal liability exposure; more complex for multiple properties or joint investors.
Cyprus Ltd Ownership
Pros: Asset protection, easier portfolio management via share transfers, deductible corporate expenses, more flexible for multiple investors.
Cons: Annual audit required (€1,000 to 2,500), corporate tax returns, HE32 filing, company secretary costs. Total annual compliance: €3,000 to 6,000.
Note: Shares in a Cyprus company that derives its value primarily from Cyprus property are subject to CGT on disposal. The company wrapper does not avoid CGT on real estate.
Find Cyprus real estate lawyers and company formation agents at CyprusDesk.
Annual Holding Costs
| Cost | Typical Range |
|---|---|
| Municipal property tax | 0.1 to 0.2% of 2013 valuation |
| Sewage tax | 0.05 to 0.3% of 2013 valuation |
| Communal services | €85 to 500/year |
| Buildings insurance | €200 to 800/year |
| Property management (if rented) | 5 to 15% of rental income |
| Accountant (if company structure) | €2,000 to 5,000/year |
By European comparison, Cyprus annual holding costs are minimal. France, for example, levies an annual taxe foncière of 0.5 to 1.5% of rental value, plus wealth tax (IFI) above €1.3M for French residents.
Cyprus Property Market: Key Areas
| Location | Investor Profile | Avg Price/sqm |
|---|---|---|
| Limassol city centre | Urban rental demand | €3,000 to 6,000 |
| Limassol marina/CBD | Luxury, HNW buyers | €5,000 to 12,000+ |
| Paphos | Holiday rental, retirees | €1,800 to 3,500 |
| Nicosia | Local residential/commercial | €1,500 to 3,000 |
| Larnaca | Growth area | €1,500 to 2,800 |
| Protaras/Ayia Napa | Seasonal holiday let | €1,800 to 3,000 |
Key Numbers for Real Estate Investors
- Cyprus CGT on property disposal: 20%
- SDC on rental income (non-dom): 0%
- SDC on rental income (domiciled): 3%
- National annual property tax: 0% (abolished 2017)
- Inheritance tax: 0%
- Wealth tax: 0%
- VAT on new property from developer: 19% (5% on a primary residence, first 130 sqm up to €350,000)
For the full picture of the non-dom SDC exemption that eliminates SDC on rental income, see the Cyprus Non-Dom guide 2026. For the mechanics of Special Defence Contribution more broadly, see our SDC tax Cyprus guide.
Disclaimer: Property tax rules and exemptions vary significantly by individual circumstance. This article is informational only. Before investing, consult a qualified ICPAC-registered accountant and a Cyprus-licensed real estate lawyer. Find Cyprus professionals at CyprusDesk.