Navigating Property Taxes in Cyprus: A Buyer’s Guide for 2025

Buying a home on the island is still a popular ambition for many overseas investors and Cypriot residents alike. Whether you are browsing apartments for sale Limassol from your sofa in London or negotiating a villa deal on the ground, understanding the tax rules can save both money and stress. This article sets out the main charges that apply when you purchase real estate in Cyprus, explains who must pay them, and highlights recent regulatory tweaks.

VAT on New-Builds

Cyprus levies Value Added Tax at the standard rate of 19 per cent on brand-new property. Yet most owner-occupiers are entitled to the reduced 5 per cent rate on the first 130 m² of a primary residence, provided the dwelling costs no more than €350,000, the total transaction does not exceed €475,000 and the total covered area stays below 190 m². The balance above 130 m² is taxed at 19 per cent. These thresholds were tightened in 2023, so older online guides may quote more generous limits.

A buyer applying for the lower rate must live in the property for at least ten years. Should you sell earlier, the difference between 5 per cent and 19 per cent becomes payable on a pro-rata basis, though exemptions exist for life-changing events such as divorce or relocation for work.

Stamp Duty on the Contract of Sale

Once your sale agreement is lodged with the District Land Registry, stamp duty falls due. The fee is calculated on the consideration stated in the contract:

The maximum stamp duty for a single contract is capped at €20,000. Buyers purchasing jointly may execute separate contracts to exploit the bands twice, though legal fees rise accordingly.

If you are comparing two similar flats for sale Limassol, check whether the advertised price already includes stamp duty, as some developers absorb it to sweeten the deal.

Transfer Fees on Resales

On properties where VAT is not payable—typically resales—the Land Registry charges transfer fees when title deeds move into the buyer’s name. The sliding scale is:

If the property is in joint names (e.g. spouses purchasing 50–50), each half is assessed separately, which usually lowers the combined bill. Crucially, when VAT has been paid, transfer fees are nil, so a new apartment costing €300,000 attracts €14,250 VAT (assuming you qualify for the 5 per cent band on the first 130 m²) but no transfer charge.

Some buyers of apartments for sale in limassol cyprus mistakenly assume they will pay both VAT and transfer fees; in reality it is one or the other.

Municipal and Communal Levies

Immovable Property Tax, once collected by the state, was abolished in 2017. Yet two local levies remain:

• Municipal rates: roughly €85-€400 per year depending on size and borough. Funds support street lighting, green areas and similar services.
• Refuse collection: usually €200-€250 per dwelling, invoiced by the local council or community board.

Owners of holiday homes, including those who made a quick trip to scout apartments to buy in Limassol, must budget for these annual outgoings even when the property sits empty.

Capital Gains Tax on a Subsequent Sale

When you resell, any profit is subject to Capital Gains Tax at 20 per cent. The taxable gain equals the sale price minus the original purchase price, plus certain indexation allowances and deductible costs (legal fees, transfer fees, improvements). Every individual enjoys a lifetime exemption of €17,086; if the property was your primary residence for at least five of the previous eight years, the exemption climbs to €85,430.

Suppose you buy apartment Limassol for €250,000 in 2025 and dispose of it in 2030 for €320,000. Ignoring indexation, your gain is €70,000. After the basic relief of €17,086, tax is due on €52,914 — a bill of €10,582.80.

Gift and Inheritance Rules

Cyprus abolished inheritance tax in 2000. Gifts of real estate between close relatives (parents, children, spouses) are exempt from transfer fees; transfers to siblings or grandparents attract only half the normal rate. A lawyer must still prepare a deed of gift and lodge it with the Land Registry.

Tax Planning Pointers

Investors deliberating over a 2 bedroom apartment for sale Limassol often weigh the reduced-VAT saving against the convenience of receiving title deeds immediately. New-builds sometimes take years before deeds are issued, leaving owners unable to mortgage or resell easily. By contrast, a resale with deeds ready may trigger transfer fees now but grant flexibility later.

Those opting for a smaller footprint—say, a 1 bedroom apartment for sale Limassol—should note that the 5 per cent VAT band still applies only to the first 130 m². Buying compact does not change the percentage, though the absolute tax paid is lower because the purchase price is smaller.

Practical Checklist Before You Sign

1. Confirm VAT status. Ask the agent to state clearly whether the price includes 19 per cent VAT, qualifies for 5 per cent, or carries no VAT at all.
2. Estimate transfer fees. Use the Land Registry calculator or a lawyer’s spreadsheet for resale properties.
3. Budget for stamp duty. Pay it within 30 days of signing to avoid penalties.
4. Inspect communal charges. New developments sometimes advertise low contributions that rise sharply once the owners’ committee takes over.
5. Keep every receipt. Legal, architectural and renovation costs may be set against capital gains later.
6. Seek independent advice. A Cypriot lawyer who is not tied to the developer will flag hidden contract clauses.

Final Thoughts

Cyprus offers an attractive mix of Mediterranean lifestyle, English-language services and, for many, a clear tax framework. Take the time to map each levy—VAT, stamp duty, transfer fees, municipal dues and eventual capital gains—against your budget. The sums vary according to whether you go for a turnkey coastal penthouse or one of the quieter inland cottages, yet the underlying rules remain consistent. Read the small print, file on time and your purchase should progress smoothly, leaving you free to enjoy your new address under the Levantine sun.