Cyprus Tax Reform 2026: What It Means for Property Owners
Cyprus's biggest tax reform in two decades took effect on 1 January 2026. For property, it abolishes stamp duty and the defence contribution on rent, raises capital gains exemptions and introduces new deductions for homeowners and tenants.
By RealDeal team · 3 min read · Published 8 Jan 2026 · Updated 8 Oct 2026
Contents
Cyprus's tax reform, which EY describes as the most significant in 20 years, took effect on 1 January 2026. The House of Representatives approved the reform bills on 22 December 2025, and the laws were published in the Official Gazette on 31 December. Alongside headline changes such as a higher corporate tax rate, the package contains several measures that directly affect people who buy, sell, own or rent property in Cyprus. This article summarises them.
At a glance
| Measure | Until 2025 | From 1 January 2026 |
|---|---|---|
| Stamp duty on contracts | 0.15–0.20% of value, capped at €20,000 | Abolished |
| SDC on rental income | 3% on 75% of rent (2.25% effective) | Abolished |
| CGT lifetime exemption: main residence | €85,430 | €150,000 |
| CGT lifetime exemption: general | €17,086 | €30,000 |
| CGT lifetime exemption: agricultural land | €25,629 | €50,000 |
| CGT on sale of shares in property-holding companies | Where at least 50% of value comes from Cyprus property | Where at least 20% does |
| Tax-free income threshold | €19,500 | €22,000 |
| Deduction for rent or mortgage interest on main residence | — | Up to €2,000 |
| Deduction for energy upgrades of main residence or a new EV | — | Up to €1,000 |
| Corporate income tax | 12.5% | 15% |
| SDC on dividends (Cyprus-domiciled individuals) | 17% | 5% |
Sources: Andersen, EY, Harris Kyriakides.
For buyers
The repeal of the Stamp Duty Law means contracts signed from 1 January 2026 no longer carry stamp duty. On a €250,000 purchase that saves €407.50, and it removes a compliance step at the contract stage.
Homeowners can now deduct up to €2,000 a year of mortgage interest on their main residence from taxable income, and up to €1,000 for energy-efficiency upgrades to that home. These family and household deductions are subject to income criteria.
For sellers
Capital gains tax on Cyprus property remains at 20%, but the lifetime exemptions are much higher. For example, a gain of €200,000 on the sale of a main residence would previously have left €114,570 taxable, giving tax of €22,914. Under the new €150,000 exemption, €50,000 is taxable and the tax is €10,000. The existing conditions for each exemption continue to apply.
The reform also closes a common route around the tax. CGT now applies to the sale of shares in a company where at least 20% of its value comes, directly or indirectly, from Cyprus property, down from 50%.
For landlords
The Special Defence Contribution on rent is abolished, saving 2.25% of gross rent. Rental income remains subject to income tax (or corporation tax for companies) and to the 2.65% GHS contribution. New leases are no longer subject to stamp duty either.
From 1 July 2026, rent will have to be paid through traceable methods such as bank transfer or card, under a new provision of the tax collection law.
For property held through companies, corporation tax rises to 15%. At the same time, SDC on dividends paid to Cyprus-domiciled individuals falls from 17% to 5%, and the deemed dividend distribution rules are abolished for profits earned from 2026.
For tenants
Tenants can deduct up to €2,000 a year of rent paid on their main residence, under the same deduction that applies to mortgage interest and subject to the same income criteria.
What this means
For most private buyers and owners, the reform lowers the tax cost of property: no stamp duty, no SDC on rent, higher capital gains exemptions and new deductions. Investors using companies face a higher corporate rate but lower tax on distributed profits. Many measures come with conditions and income limits, so individual cases should be checked with a tax adviser.
This article is for information only and is not tax or legal advice.