The landscape of Cyprus real estate has officially changed as of January 1, 2026. Following the most significant tax overhaul in over two decades, property buyers and landlords are set to benefit from a series of “direct-to-pocket” savings.
If you are looking to buy, rent, or invest in 2026, here are the three critical changes you need to know.
1. Zero Stamp Duty: Lowering Entry Costs
For years, stamp duty was an unavoidable “closing cost” for every property contract in Cyprus. As of January 2026, Stamp Duty has been abolished for most property transactions.
- What this means: When you sign a contract of sale for a new home or apartment, you no longer have to pay the tiered stamp duty fees.
- The Saving: On a luxury villa worth €1,000,000, this previously cost roughly €2,000. While it may seem small relative to the house price, it is one less administrative hurdle and a direct reduction in your initial capital outlay.
2. Rental Income Revolution: SDC Tax Abolished
This is the most impactful news for “Buy-to-Let” investors. Previously, landlords who were tax residents and domiciled in Cyprus had to pay a 3% Special Defence Contribution (SDC) on 75% of their gross rental income, in addition to standard Income Tax.
- The Change: The 3% SDC on rental income is now completely abolished.
- The Saving: Rental income is now only subject to Personal or Corporate Income Tax. This immediately increases the Net Rental Yield for local investors.
- Transparency Note: To support this reform, the government has mandated that all rent payments exceeding €500 must be made electronically (bank transfer or card) starting July 2026 to ensure transparency.
3. Higher Tax-Free Threshold & New Deductions
The 2026 reform isn’t just for big investors; it’s designed to help families and residents manage the cost of living and housing.
- New Tax-Free Limit: The personal income tax-free threshold has been raised from €19,500 to €22,000.
- Housing & Green Deductions: Residents can now claim new annual deductions specifically for:
- Mortgage Interest or Rent: Up to €2,000 deduction for primary residences.
- Green Upgrades: Up to €1,000 for energy-efficient renovations (solar panels, insulation, etc.).
- Home Insurance: Up to €500 for natural disaster coverage.
2026 Tax Quick Reference Table
| Tax Type | 2025 Rate | 2026 Rate |
| Stamp Duty | Variable (up to 0.2%) | 0% (Abolished) |
| SDC on Rent | 3% (on 75% of rent) | 0% (Abolished) |
| Tax-Free Income | €19,500 | €22,000 |
| Corporate Tax | 12.5% | 15% |
The Bottom Line for 2026
While the Corporate Tax rate has increased to 15% to meet international EU standards, the abolition of stamp duty and SDC on rent provides a massive boost to the domestic real estate market. 2026 is shaping up to be a year where “Green” and transparent investments are rewarded with the highest tax efficiency.
Ready to explore the 2026 market?
Contact our experts for a personal tax consultation
Frequently Asked Questions: Cyprus Tax Reform 2026
Does the 5% VAT still apply to large villas?
Only if you act fast. To use the “Old Rules” (5% VAT on the first 200 sqm regardless of total size), your planning permit must have been filed by October 31, 2023, and your VAT declaration must be submitted to the Tax Department by June 15, 2026. For all other new villas, the 19% standard rate applies if the property exceeds 190 sqm in total area.
I missed the October 2023 permit date. What is my VAT rate now?
If your permit was filed after that date, you fall under the New Rules. You only get 5% VAT if:
The total value is under €475,000. If your home is larger or more expensive, you will likely pay the full 19% VAT.
The total area is under 190 sqm (you get 5% on the first 130 sqm).
Is it true that Stamp Duty is gone forever?
Yes. As of January 1, 2026, the Stamp Duty Law has been abolished for the vast majority of real estate contracts and loan agreements. This simplifies the closing process and reduces your “upfront” costs by several thousand euros on high-value properties.
How much can I earn from rent before paying tax in 2026?
The personal tax-free threshold has been raised to €22,000. If your total annual income (including rent) is below this, you pay 0% income tax. Additionally, the 3% SDC tax on rental income has been abolished for all residents, significantly increasing the net profit for “Buy-to-Let” investors.
Can I still pay my rent in cash?
No. From July 1, 2026, it is a legal requirement that all rent payments exceeding €500 per month be made via bank transfer or electronic payment. Both landlords and tenants can face fines for non-compliance. This measure is part of the 2026 push for market transparency.