Cyprus’ real estate sector is evolving once again. Starting January 1, 2026, Cyprus has implemented a new comprehensive tax reform, changing how property transactions, ownership and investments are approached. The new reforms are designed to minimize friction for the everyday purchaser, increase market confidence, and address customer concerns in the long run. If you are thinking of purchasing real estate in Cyprus, you will need to be familiar with these changes.
In terms of the reform, there are various changes that need to be considered. The most important is the reduction and simplification of costs associated with transactions, especially designed to aid families but also individuals. Another major change is the increase in regulation pertaining to complex ownership structures, particularly with companies and indirect asset ownership. All in all, these changes point towards a new level of maturity in the real estate industry.
Lower Transaction Costs for Buyers
One of the most buyer-friendly changes is the complete abolition of stamp duty. Stamp duty does not apply for any contract signed from January 1, 2026, onwards. Stamp duty could run into significant amounts for high-value properties, which could have added pressure at the point of purchase. The removal of this cost makes the buying process simpler and more accessible to buyers, especially first-timers.
At the same time, the capital gains taxation system has also been adjusted to reflect the current market realities. Although the rate of capital gains tax remains the same, the amount of capital gains that can be exempt from taxation throughout a person’s lifetime has increased substantially. This is because property prices have increased over the years, and people tend to change homes more frequently compared to the past.
The relief for the sale of a primary residence has almost doubled, providing significant benefit for homeowners. There has also been an increase in the relief for the sale of agricultural land and general property sales. What this means is that more people will pay less when selling their property, thus encouraging circulation in the market.
Another significant change is in the area of land for apartment exchanges, also referred to as “antiparochi.” In such cases, the sellers are now able to enjoy full capital gains tax relief at the time of exchange, on the condition that the development is completed within a specified time frame.
Rental Income and Ongoing Ownership
The reform also provides clarity and comfort for property owners who rent out their properties. The special contribution for rental income has been abolished. Rental income is now taxed under the regular rules of income tax, making the process easier for calculating tax returns while providing higher returns for landlords.
From mid-2026 onwards, rental payments above a certain amount have to be made through traceable bank methods. This helps in promoting transparency for rental properties in the same way other compliance regulations are in place.
For providing further comfort for residents, deductions are now available for primary residences. A deduction can be claimed for an amount of money for either mortgage or rent each year for residents who are buying or renting a property. A further deduction is available for home insurance for natural risks, promoting responsible homeownership.
Stronger Rules for Corporate Property Structures
Although beneficial for individuals, the reform imposes tougher regulations on business structures that own real estate. Businesses are now classified as property-focused at a much lower threshold, meaning that the sale of shares related to the value of the property will be under closer scrutiny.
This change is aimed at addressing the issue of property being sold indirectly through the purchase of shares in companies rather than direct sales. The intention is not to deter investment but to ensure that the transaction is economically sound and in line with the principles of the tax system. Although this reform does not affect individual buyers who purchase property for personal use, it provides a clear and consistent framework for larger investors.
Another significant change is that tax compliance is now directly linked to property transfer. The government can now withhold approval of a property transfer if the individuals involved in the transaction have not complied with tax obligations.
Expanded Filing and Modern Administration
The reform also overhauls tax administration. Reporting requirements now apply to a wider range of taxpayers, with consistent due dates and improved enforcement. However, the thresholds for mandatory audits have been raised, so that compliance costs are more in line with current levels of income.
For most consumers, these changes are behind-the-scenes. The true benefit of these changes is that they establish a more harmonized, trackable, and globally comparable system.
Stability Through Continuity
Significantly, many of Cyprus’ most attractive tax advantages remain unchanged. Cyprus continues not to tax capital gains on the sale of securities, unless property is a dominant aspect. The rules for residency remain unchanged, providing flexibility for mobile individuals. The non-domicile regime continues to provide long-term certainty, and incentives for skilled professionals moving to Cyprus remain in place.
Holding company structures, participation exemptions, and investment fundamentals remain unchanged. This provides comfort that a new regime is not dismantling existing strengths, but rather building on them offering an improved and modernized tax system.
What This Means for Buyers
For new entrants to the real estate market in Cyprus, this is a clear message. The new tax policy is one that promotes genuine homeownership, minimizes unnecessary transactional costs, and makes things easier to understand.
By rewarding compliance and transparency while taking into consideration the modern way of doing business, the plan has managed to offer to turn an outdated and bureaucratic process, into an easy and straight-forward process.
This is not a signal of a risky market; this is a signal of a mature market. It is a signal that says to people: “Come and do business with us because we’re a country that is growing and developing responsibly.”
Cyprus Property Tax Reform –FAQ
| 1. When do the changes start? | From 1 January 2026, with some measures starting later in the year. |
| 2. Is stamp duty still payable? | No. Stamp duty has been fully abolished for new contracts. |
| 3. Has capital gains tax been removed? | No, but tax-free profit thresholds have increased significantly. |
| 4. Does this benefit homeowners? | Yes. Higher exemptions reduce tax on the sale of a main home. |
| 5. What changed for rental income? | The special contribution on rent has been abolished. |
| 6. Are electronic rent payments required? | Yes, from 1 July 2026 for rents over €500 per month. |
| 7. Will this affect typical buyers? | The reforms mainly reduce costs and improve clarity. |
| 8. Did residency or non-Dom rules change? | No. These regimes remain unchanged. |
