Do you still pay stamp duty on a property contract in Cyprus?

No. The 2026 reform abolished stamp duty on property contracts for both individuals and companies, removing what was previously an unavoidable cost at the point of signing.

How is rental income taxed in Cyprus after the 2026 reform?

For individuals, rental income falls within the progressive income tax bands of 0% to 35%, with the first 22,000 euro of total annual income untaxed. The Special Defence Contribution on rent has been abolished. A General Health System contribution of 2.65% still applies, subject to an annual cap.

How much of my Cyprus rental income is actually taxable?

Less than the gross rent. A 20% wear and tear allowance is deducted automatically without receipts, a 3% building allowance applies annually based on the building's cost, and loan interest, insurance and maintenance are deductible. On 18,000 euro of annual rent the taxable base can fall to 12,000 euro or below before the personal allowance is applied.

What is the capital gains tax on selling property in Cyprus?

20%, applied after an indexation allowance that adjusts the original purchase price for inflation. Lifetime exemptions then apply: 30,000 euro generally, and 150,000 euro on a main residence.

Can I still sell shares in a property-holding company to avoid capital gains tax?

No. The property-rich threshold has been reduced from 50% to 20%. Where a company derives 20% or more of its value from Cyprus real estate, a sale of its shares is treated as a property sale and 20% capital gains tax applies.

Is short-term letting taxed differently from long-term rental in Cyprus?

Yes. Short-term letting is treated as a business activity, not passive rent. It requires registration with the Deputy Ministry of Tourism, triggers the 9% hospitality VAT rate once turnover exceeds 15,600 euro, and the income is taxed as business profit rather than rent.

Does non-dom status still help with rental income?

Less than it did. With the Special Defence Contribution abolished for everyone, the non-dom position on rental income no longer differs from that of other residents. The advantage now sits mainly with dividends and securities.

Can a sale be blocked for tax reasons?

The Tax Commissioner can withhold consent for a property transfer where the parties are not fully tax compliant. In practice this makes compliance a precondition of being able to transfer the property.

Cyprus Property Tax 2026 | Acquisition, Holding and Exit

Cyprus taxes property in three layers: acquisition, holding and exit. The 2026 reform changed all three. It removed stamp duty on contracts, abolished the Special Defence Contribution on rental income for individuals, raised the main residence capital gains exemption to €150,000, and tightened the rules on companies that hold property.

The gap between a good purchase and a mediocre one usually sits in those three layers rather than in the headline price.

How the Three Layers Work in Practice

The Acquisition Layer

At purchase, the position is largely binary. A new build attracts VAT. A resale attracts transfer fees. Which side of that line a property falls on changes the entry cost materially, and the reduced 5% VAT rate carries conditions on floor area and value that decide whether the maths on a new home works at all.

The 2026 reform abolished stamp duty on property contracts outright. It was previously an unavoidable entry cost for both individuals and companies, and its removal reduces the capital required at the point of signing.

We cover this layer in detail in VAT, transfer fees and closing costs.

The Holding Layer

For individual landlords, the holding phase became considerably lighter. The Special Defence Contribution, which previously took 3% of 75% of gross rent, has been abolished for everyone.

Rental income for individuals now sits within the progressive income tax bands, running from 0% to 35%, with the first €22,000 of total annual income remaining untaxed. The remaining ongoing charge is the General Health System contribution at 2.65%, subject to an annual cap.

For non-domiciled residents this levels a field that previously tilted their way on rent. The non-dom advantage now shows up most clearly on dividends and securities rather than on rental income. See non-dom status in Cyprus for where that still matters.

The Tax Shields Most Landlords Fail to Use

Tax is not charged on gross rent. It is charged on a reduced base, and several of the reductions are automatic.

On €18,000 of annual rent	Effect
20% wear and tear allowance	€3,600 deducted automatically, no receipts required
3% building allowance	Annual deduction based on the building’s cost
Loan interest, insurance, maintenance	Deducted against the rental income
Taxable base after deductions	Can fall to €12,000 or below
Personal allowance applied	First €22,000 of total income untaxed

The difference between a high-tax rental and a tax-efficient one is often nothing more than whether these were claimed.

The Exit Layer

Capital gains on Cyprus property are taxed at 20%, but two mechanisms sit in front of that rate.

The indexation allowance adjusts the original purchase price upward for inflation, so you are not taxed on a gain that only exists because the currency lost value.

The lifetime exemptions were raised significantly in 2026. The general exemption now stands at €30,000, and the main residence exemption at €150,000. For a family selling a primary home, that can shield a substantial part of a real gain, and in many cases all of it.

Where Corporate Structures Now Sit

The reform is friendlier to individuals and distinctly less friendly to companies holding property.

Selling shares in a property-holding company, rather than the property itself, was previously a route around capital gains tax. The threshold at which a company counts as property-rich has been cut from 50% to 20%. If a company draws 20% or more of its value from Cyprus real estate, a sale of its shares is treated as a property sale and 20% capital gains tax applies.

A second change matters more than it first appears. The Tax Commissioner can now withhold consent for a property transfer where the parties are not fully tax compliant. Compliance has stopped being a paperwork obligation and become a precondition of being able to sell at all.

Short-Term Letting Is a Business, Not Passive Rent

Gross yields on short-term letting look better than long-term leasing. The tax and compliance treatment is not comparable.

Short-term letting is classified as a business activity. It requires registration with the Deputy Ministry of Tourism. Once annual turnover passes €15,600, the 9% hospitality VAT rate applies. Income is taxed as business profit, at progressive rates for individuals or 15% for companies, rather than as passive rent.

A gross yield comparison between a short let and a long let is not a like-for-like comparison, and the net position needs modelling before the purchase, not after.

This briefing is general information about how Cyprus property taxation is structured. It is not tax or legal advice and does not take account of your circumstances. Rates, thresholds and reliefs change, and their application depends on facts specific to you. Take advice from a qualified Cyprus tax adviser before acting. Cyprus Gate covers the areas under the effective control of the Republic of Cyprus.

The Three Tax Layers of Cyprus Property: Acquisition, Holding and Exit

How the Three Layers Work in Practice

The Acquisition Layer

The Holding Layer

The Tax Shields Most Landlords Fail to Use

The Exit Layer

Where Corporate Structures Now Sit

Short-Term Letting Is a Business, Not Passive Rent

How Cyprus Gate Models the Three Layers

Depositing the Contract of Sale with the Cyprus Land Registry

Title Deeds in Cyprus: Explained

VAT, Transfer Fees and Closing Costs

Independent Lawyers for Cyprus Property

Non-Dom Status in Cyprus

Common Expenses in Jointly Owned Buildings

Cyprus Property Tax: Frequently Asked Questions