Executive Summary (TL;DR): The dual-VAT system in Cyprus is ending. On June 15, 2026, the transitional period for the “Old Rules” (which allowed 5% VAT on the first 200m² regardless of price) expires. To save up to 14% on your investment, buyers must ensure their VAT applications are submitted before this mid-summer cutoff.
The 2026 VAT Shift: Old vs. New Rules
Since the 2023 amendment (Law 42(I)/2023), the market has been in a “dual-regime” phase. As of January 2026, we are in the final countdown.
| Feature | Old Rules (Expires June 15, 2026) | New Rules (Law 42(I)/2023) |
| Eligible Area @ 5% | First 200m² | First 130m² only |
| Max Property Value | No Limit | €350,000 (for 5% rate) |
| Max Total Area | No Limit | 190m² total |
| Max Transaction Value | No Limit | €475,000 |
Critical Deadline Note: If your property project applied for a planning permit before October 31, 2023, you can still use the “Old Rules”—but only if you submit your formal VAT reduction declaration to the Tax Department by June 15, 2026.
Why This Matters for Your 2026 Investment
The Cyprus Homes Network has seen an influx of “grandfathered” properties hitting the market. These are homes that still qualify for the old, more generous VAT rules.
- The “14% Penalty”: If you miss the deadline or fail to use the home as a primary residence for 10 years, the Tax Department can reclaim the 14% difference.
- 2026 Inspections: Authorities have intensified checks in coastal areas like Paphos and Limassol to ensure properties under the 5% rate aren’t being used as illegal Airbnbs.
FAQ: Cyprus VAT & Real Estate 2026
Can I still get 5% VAT if my house is 250m²?
Under the new rules, no. If the total area exceeds 190m², you generally pay the full 19% on the whole amount. Under the old rules (if you meet the June deadline), you could get 5% on the first 200m².
Is there a VAT exemption for children?
Yes, 2026 rules allow a “transfer to adult children” without VAT clawback, provided they use it as their primary home.
What happens if I miss the June 15, 2026 cutoff?
The “Old Rules” will be permanently archived. All new applications will strictly follow the 130m² / €350,000 limits.