Buying Property in Cyprus? Your Guide to Taxes as a Foreign Buyer

Cyprus is a wonderful place to purchase property, known for its lavish Mediterranean lifestyle and convenient location. If you are thinking about buying property here and are not from Cyprus, it helps to understand the local tax system. Knowing the taxes for buying, owning, and selling property helps you make smart choices and avoid surprises.

Can You Buy Property in Cyprus?

The rules depend on your nationality.

If you are an EU Citizen, you have the same rights to buy a house in Cyprus as Cypriot citizens. There are generally no restrictions. You will need residency permits if you live here long-term, but that is separate from buying property.

If you are not an EU Citizen (Third Country National – TCN), there are specific rules for you:

One Property Limit: You can usually buy only one property for your use (e.g., a flat, house, or land up to 4,014 sq m).

Permission Needed: You must get permission from the Cyprus Council of Ministers before you buy a house for sale in Cyprus. The sale is not legal without it. You apply using a specific form and provide documents like your contract and passport copy. This takes time—allow from 30 days to a few months. Don’t worry; most genuine buyers get approval. We often help our TCN clients with this application process.

What Taxes Do You Pay When Buying?

When you buy Cyprus houses for sale, expect to pay certain taxes and fees. The main ones are VAT (for new properties), Property Transfer Fees (for resales), and Stamp Duty.

Value Added Tax (VAT) on New Properties VAT usually applies only to brand new Cyprus homes for sale sold by a developer. Resales are normally exempt.

Standard Rate (19%): This is the usual rate.

Reduced Rate (5%): If the property will be your main, permanent home in Cyprus, you might pay only 5% VAT.

• Who qualifies (New Rules): Since June 2023, stricter rules have applied. You must be an individual over 18, buying your first house for sale in Cyprus at this rate. The 5% rate applies only to the first 130 sq m (up to €350k value). The total property value cannot exceed €475,000, and the total area cannot exceed 190 sq m. If you go over these limits, you pay 19% VAT on everything.
• Older Permits: If planning permission was applied for before 31 October 2023, older, more generous rules apply (5% on the first 200 sq m). You must apply by 15 June 2026.
• How to Apply: Apply electronically before you move in.
• 10-Year Rule: You must use the property as your main home for 10 years straight. If you stop using it as your main home within 10 years (e.g., sell or rent it long-term), you must tell the VAT Department and repay part of the VAT saving.

The VAT rules for the 5% rate are complex. Think carefully about the commitment. A resale property might be simpler as it avoids VAT, although it will have Transfer Fees.

Property Transfer Fees (PTF) on Resale Properties

These fees are paid when the property’s title deed is transferred to you.

• When do they apply? Mainly for resales, or any sale where VAT is not charged.
• How much are they? Based on the property’s market value:
  • 3% up to €85,000
  • 5% from €85,001 to €170,000
  • 8% over €170,000
• 50% Discount: If the property purchase does not include VAT, these fees are automatically halved.

No PTF if VAT Paid: If you paid VAT (19% or 5%), you do not pay PTF.

Buying Jointly: Buying with someone else often lowers the total fees, as the value is split.

The 50% discount makes resales attractive from a cost perspective.

Stamp Duty: You pay this tax on the purchase contract.

• Why and When? It makes your contract legally valid. Pay within 30 days of signing.
• How much is it?
  • 0% up to €5,000
  • 15% from €5,001 to €170,000
  • 20% over €170,000
• Maximum Amount: Capped at €20,000 per contract. Stamp Duty is usually a small cost, but paying on time is essential.

What Are the Yearly Costs of Owning Property?

You will have some ongoing annual costs.

• Local Authority Taxes: Cyprus abolished the national property tax (IPT). But you still pay annual taxes/fees to your local council. These cover local services like rubbish collection and street lighting. Costs vary by area.
• Communal Expenses: If you buy in a complex with shared facilities (like pools or lifts), you pay fees for their upkeep.
• Utilities and Insurance: You pay for electricity and water, plus property insurance.

What Taxes Apply When You Sell?

If you sell your Cyprus property, you might pay tax on the profit.

Capital Gains Tax (CGT)

• What is it? A 20% tax on the profit from selling property in Cyprus. It does not usually apply to property outside Cyprus.
• How is profit calculated? Sale price minus the inflation-adjusted cost (purchase price + improvements) and selling expenses.
• Allowances for Individuals: You can reduce the taxable profit with lifetime allowances:
  • €17,086 general allowance.
  • Up to €85,430 if you sell your main home, but you must have owned and lived in it for at least 5 years before selling. This is a valuable allowance for homeowners. Non-residents usually only get the €17,086 allowance.
• Exemptions: No CGT on inheritance or gifts between close family.

Property Disposal Levy The seller pays a small levy of 0.4% on the gross sale price. This applies even if you do not make a profit.

What About Tax if You Rent Out Your Property?

Rental income from your Cyprus property is taxed in Cyprus.

• If You Are Non-Resident: You pay income tax on your net rental income (0%-35% rates apply, first €19,500 tax-free). You do not pay Special Defence Contribution (SDC). You do pay General Healthcare System (GHS) contributions (2.65% on gross rent).
• If You Are a Resident: You pay income tax like non-residents. You pay GHS contributions. You pay SDC (effectively 2.25% on gross rent) only if you are ‘domiciled’ in Cyprus. If you are ‘non-domiciled’, you are exempt from SDC on rent.
• Expenses You Can Deduct: You can deduct costs like 20% of the rent (for buildings), loan interest, and local taxes when calculating income tax.

Cyprus Tax Residency and Non-Domicile Status

These affect your tax situation.

• Tax Resident: You become a tax resident by spending over 183 days here in a year or by meeting the 60-day rule (which requires having ties like property). Residents pay tax on worldwide income.
• Non-Domicile Status: Even as a resident, you can be ‘non-domiciled’ (most foreigners are initially). You become ‘domiciled’ for SDC tax after 17 years of residency.
• Benefit: Non-domiciled residents do not pay SDC tax on worldwide dividends, interest, or rental income. This is a significant advantage.

What Are Double Taxation Agreements (DTAs)?

Cyprus has agreements with over 65 countries to stop you from being taxed twice on the same income. Check the agreement between Cyprus and your home country.

Need Help?

Understanding Cyprus property taxes when you buy homes in Cyprus can seem complex, but we are here to help. Key points to remember:

• Buying rules depend on your EU/non-EU status.
• Taxes at purchase include VAT or PTF, plus Stamp Duty.
• Yearly costs include local taxes.
• Selling involves potential CGT (with allowances) and a small levy.
• Rental income is taxed, but SDC may not apply if you are non-resident or non-domiciled.
• Non-domicile status offers significant SDC savings.

Disclaimer: This guide gives general information based on rules in early 2025. It is not legal or tax advice. Tax laws change, and your situation is unique. Always get personal advice from qualified Cyprus legal and tax consultants before buying property.

Ready to find your perfect property in Cyprus? Contact Chris Michael Property Group today. Our experienced team can assist you every step of the way.