Purchasing a home in Cyprus is a major step – whether it’s a holiday getaway, retirement plan or long-term move. However, along with the benefits of ownership come financial obligations, including property-related taxes, income taxes and potential levies upon sale. If you plan to rent out your home or reside in Cyprus for an extended period, you’ll also need to understand the local tax regime and how it interacts with international rules.
Read on to learn about the different taxes involved in owning, renting and selling a property in Cyprus. Updated for 2025, it includes insights for both residents and non-residents, so you can take control of your finances and avoid surprises down the line.
Contents
- Local tax obligations for property owners
- Understanding tax residency in Cyprus
- Income tax on rental property
- Capital gains tax in Cyprus
Unfortunately, you can’t afford to ignore tax when buying overseas
Local tax obligations for property owners
Owning a property in Cyprus means you’re responsible for a variety of local taxes that help fund services such as waste collection, road maintenance and sewage management. These taxes are set by local authorities and are generally determined by the property’s location, usage and size.
The first fee to be aware of is the annual municipality tax. This is based on the property’s taxable value as of 1 January 2013 – or the initial assessed value for newly built homes – and ranges from 0.1% to 0.2%. Though these figures may appear low, they can add up over time, particularly for higher-valued homes. Local authorities use this income to provide general infrastructure and services for the community.
In addition, you’ll also need to cover an annual local services levy for things like refuse collection, lighting and neighbourhood upkeep. Rates typically range between €85 and €500 depending on the property’s size and usage.
For properties connected to the public sewers, you must also pay sewerage board tax. This is calculated at a rate of 0.05% to 0.3% of the same 2013 property value benchmark. The higher your property’s base valuation, the more you’ll pay.
Even though Cyprus abolished Immovable Property Tax (IPT) from 1 January 2017, these municipal and service fees effectively replaced it as the key property-related charges.
Make sure to factor these annual costs into your household budget – some municipalities have different payment deadlines and late fees if bills are missed.
Understanding tax residency in Cyprus
Your tax obligations in Cyprus will also depend heavily on whether you are considered a tax resident. In 2025, there are two main paths to tax residency in Cyprus: the traditional 183-day rule and the more flexible 60-day rule.
First, if you live in Cyprus for more than 183 days in any calendar year, you are automatically considered a tax resident. This means you’ll be liable for taxation on your worldwide income.
However, under the 60-day rule – introduced in 2017 – individuals who don’t become residents elsewhere but stay in Cyprus for at least 60 days can also qualify. To do so, you must not spend more than 183 days in another country and must:
- Have your main ties to Cyprus (such as a business, employment or own property)
- Not be considered a resident for tax purposes in any other state
As of 2023, all applicants for Cypriot residency permits (temporary or permanent) must satisfy one of these residency criteria. Visa and permit applications for property buyers will additionally require proof of sufficient annual income – standing at €24,000 annually for the main applicant, with an extra 20% for a spouse and 15% for each dependent.
Tax residency affects not just income taxation, but also your liability for tax on pensions, capital gains and rental income. Be sure to take specialist advice if you reside part-time in Cyprus or hold financial ties to other countries.
Income tax on rental property
Whether you earn rental income occasionally or year-round, it’s important to understand how it will be taxed under Cypriot law – especially as a foreign owner.
If you are considered a Cyprus tax resident under the criteria outlined above, rental income will form part of your total annual income. It will be assessed under the standard Cyprus tax bands, which from 2025 are as follows:
| Chargeable income for the tax year (€) | Tax rate (%) | Accumulated tax (€) |
|---|---|---|
| 0 – 19,500 | Nil | Nil |
| 19,501 – 28,000 | 20 | 1,700 |
| 28,001 – 36,300 | 25 | 3,775 |
| 36,301 – 60,000 | 30 | 10,885 |
| 60,000+ | 35 |
In addition to income tax, landlords may also be liable for the special defence contribution (SDC) at 3% on 75% of gross rental income. However, this generally only applies to Cypriot tax residents who are also domiciled in Cyprus.
If you’re not a tax resident, your rental earnings from Cypriot property are still subject to income tax in Cyprus, with rates commonly starting from 20%. However, you may be able to reduce your tax burden depending on any double tax treaties in place between Cyprus and your home country.
Tax authorities may require you to provide detailed records, including tenancy agreements, expense receipts and utility statements. If applicable, you’ll also be able to deduct allowable expenses, such as repair costs, letting agency fees and property insurance.
Always seek support from a bilingual tax adviser in Cyprus who can help with ongoing declarations and ensure you remain compliant.
Capital gains tax in Cyprus
If you decide to sell your Cypriot property for a profit, you may owe capital gains tax (CGT). You pay a flat rate of 20% on the net gain made when you sell real estate situated in Cyprus.
Fortunately, some reliefs are available:
- The first €17,086 of gain is exempt per individual. If the property is jointly owned, each owner may claim this exemption.
- If the property has been your main private residence continuously for at least five years, you may be entitled to a larger exemption of up to €85,430.
In calculating the gain, you are allowed to deduct:
- Costs of property improvements
- Allowable inflation adjustments over the period of ownership
- Legal fees and estate agent commissions
- Previous transfer fees and duties paid
If you purchased the property before certain legislative changes or under special government schemes, further reliefs may be available – it’s best to have your contract and receipts reviewed by a local accountant before finalising the sale.
Cyprus does not currently tax gains on sales of shares or other investments (unless the asset is connected with Cypriot real estate). This could impact you if you own property via a company.
Bear in mind that CGT is separate from income tax. You must declare it using the correct forms within the month following the property’s transfer at the Land Registry.
Plan ahead for peace of mind
Understanding your tax obligations in Cyprus is essential to avoiding financial penalties and ensuring your property remains a positive asset. Whether you’re planning a short-term investment, a long-term rental or a place to retire, make sure you budget for annual taxes and resale-related costs.
If you’re unsure where to start, speak to one of our trusted property experts. They can connect you with English-speaking accountants, lawyers and advisers who specialise in supporting international buyers. With the right support, you’ll enjoy not only the Mediterranean sunshine but full peace of mind.
Ready to take the next step? Download your free Cyprus buying guide for expert advice.
