Property Maintenance in Cyprus in 2026: Taxes, Utilities, and Legislative Innovations

The Cyprus real estate market has entered a new era. On December 22, 2025, the Parliament approved a massive tax reform package, the provisions of which came into force on January 1, 2026. These changes radically alter the economics of home ownership: outdated fees are being abolished and tax-free limits are being raised, but at the same time, the conditions for obtaining benefits when purchasing property are being tightened.

In this review, we will analyze in detail how the new rules affect investors and residents, and provide up-to-date calculation examples for all mandatory payments.

VAT on Purchasing New Builds: Conditions and Calculations

The most discussed change has been the restructuring of the rules for applying the reduced VAT rate. The standard rate is 19%. The conditions for reduced VAT, conceptually introduced in 2023, remain relevant, but stricter timeframes and limits begin to apply from 2026.

It is important to remember that the reduced rate of 5% is not an automatic privilege for all new buildings, but a social benefit. It is intended exclusively for individuals purchasing real estate as their primary place of residence in Cyprus(permanent residence for at least 10 years). The benefit is applied upon application and subject to compliance with the law; if the purpose of the object changes (for example, it ceases to be the main home), consequences in the form of additional charges are possible.

To apply the 5% rate under the current rules, strict criteria must be met:

1. The value of the property must not exceed €350,000;
2. The total value of the housing cannot be higher than €475,000 (19% is charged on the difference between €350,000 and €475,000);
3. The preferential rate applies only to the first 130 sq. m of area;
4. The total area of the housing must not exceed 190 sq. m.

Transition Period: A transition period is in effect in 2026. If an application for a planning permit or an application for the benefit is submitted before June 15, 2026, the buyer can take advantage of the “old” conditions. They provide for a benefit on 200 sq. m of area without strict limits on the total value of the housing.

Example of VAT calculation (apartment 100 sq. m, price €300,000) subject to conditions:

• The object fits completely within the limits (area up to 130 sq. m, price up to €350,000);
• Tax calculation: €300,000 × 5% = €15,000;
• Savings compared to the standard rate (19%) amount to €42,000.

If a buyer purchases real estate as a “holiday home” (not for permanent residence) or for investment purposes, they are required to pay the full 19% VAT.

Abolition of Stamp Duty and Transfer Fee Calculation

One of the most positive pieces of news from the reform was the complete abolition of Stamp Duty. The law on abolition came into force on 01.01.2026. Previously, this fee was charged upon signing the contract and depended on the transaction amount. Now buyers are completely exempt from this payment.

To understand the scale of savings:

• When buying an apartment for €200,000, the savings will be about €400;
• When buying a villa for €1,000,000, the investor will save about €2,000.

The situation with the Transfer Fee remains the same:

• If the transaction is subject to VAT (primary market) – Transfer Fee is not charged (0%);
• If the transaction is not subject to VAT (secondary market) – a 50% discount applies to the tax amount.

Example of Transfer Fee calculation for secondary real estate priced at €200,000 (one owner):

1. On the first €85,000, the rate is 3% = €2,550;
2. On the next €85,000, the rate is 5% = €4,250;
3. On the remaining €30,000, the rate is 8% = €2,400;
4. Total amount at base rates: €9,200;
5. Total to pay (including 50% discount): €4,600.

This makes the secondary market still attractive in terms of associated costs.

Capital Gains Tax: Increased Exemptions

When selling real estate, the owner is required to pay Capital Gains Tax (CGT) at a rate of 20% of the net profit. The most significant change in 2026 was a substantial increase in non-taxable minimums (exemptions), which had not been revised for decades.

New exemption thresholds from January 1, 2026:

• €30,000 – base exemption for any individual (previously €17,086);
• €150,000 – exemption when selling a primary residence, if the owner has lived in it for at least 5 years (previously €85,430).

Example of tax calculation when selling an investment apartment:

• Purchase price: €200,000;
• Sale price: €300,000;
• Gross profit: €100,000;
• Subtracting the new base exemption: €100,000 – €30,000 = €70,000 (taxable base);
• Tax (20%): €14,000.

Thanks to the increased exemption, the tax burden on the seller has noticeably decreased, which stimulates the resale market.

Annual Expenses: Taxes and Utilities

There is still no state Immovable Property Tax. However, municipal fees are charged annually (waste, street lighting, sewerage/drainage, etc.).

• On average, this totals €90–€300 per year depending on the municipality, district, and type of object.
• For some objects, it may be higher. Compared to data from 5 years ago, tariff revisions and the consolidation of municipalities are more common: sums have become more variable by region, and individual fees may be billed differently.

The market is also actively discussing the possible introduction by 2026 of a so-called “Mansion Tax” (on objects worth over €3 million). Even if adopted, the impact on the mass market will be minimal: the tax will affect a limited number of ultra-high-value objects, while transactions in the mass segment (apartments and mid-range houses) will remain unchanged.

Utility costs: Maintenance of the adjoining territory is necessarily included in utility payments. If there is a management company, the cost of its services can range from 100 to 500 euros per year.

For standalone objects (e.g., villas), expenses will be fractional and depend on the schedule of specialists:

• Pool maintenance: by specialists – 150 euros per month;
• Gardener: 40 euros once every 3-4 months;
• Disinfection: pest and rodent control – 30 euros once every 2-3 months.

Resource costs are a separate item:

• Water: paid according to consumption meters. Usually, expenses for three months are 30-35 euros, the bill is issued by the water utility once every 3 months.
• Electricity: also by meters. On average, expenses for 2 months range from 50 to 150 euros. The amount depends on the usage time of air conditioners and heating appliances. The bill is issued once every 2 months.
• Waste collection: paid once a year by invoice from the municipality. On average, this component is 120-140 euros per year.

Insurance of real estate remains voluntary (if there is no mortgage), the cost of the package starts from 60 euros per year.

Rental Income and Non-dom Status

Since January 1, 2026, taxation of rental income has become much more profitable.

The main news is the abolition of the Special Defence Contribution (SDC) on rental income. Previously, this tax was 3% of 75% of the gross income. Now it is completely abolished for all categories of owners.

In this regard, the question arises: why is Non-domicile status needed now? Non-dom (non-domiciled for SDC purposes) is a tax resident of Cyprus who is not considered domiciled/deemed-domiciled in Cyprus.

Even after the abolition of the rental tax, this status remains a critically important tax planning tool, as it provides the following privileges:

• Full exemption from Defence Contribution on dividends (standard rate 17%);
• Full exemption from Defence Contribution on interest income on deposits (standard rate 30%).

How rental taxes are calculated now (for everyone): For an ordinary landlord (with or without Non-dom status), the calculation looks the same:

1. GESY Contribution (National Healthcare System): 2.65% of gross income;
2. Personal Income Tax (PIT): A new non-taxable threshold has been added – €22,000 per year (previously €19,500).

Calculation example (annual rental income €20,000):

• Income Tax: €0 (since income is below the €22,000 threshold);
• Defence Contribution (SDC): €0 (abolished);
• GESY: €20,000 × 2.65% = €530;
• Total net income: €19,470.

Summary: Assessing Conditions for Buyers

The 2026 tax reform has made the Cyprus market more balanced, although it has introduced new filters for buyers.

Key pros and cons of the current situation:

• Positives: Complete abolition of Stamp Duty and SDC on rent, increase in the non-taxable minimum for Income Tax (€22,000) and Capital Gains Tax (€30,000).
• Challenges: More difficult access to the preferential 5% VAT rate. Investors planning to buy expensive real estate should hurry to take advantage of the transition period until June 15, 2026.

Conditions look most favorable for buyers of primary residences within the preferential VAT limits and for landlords, as the abolition of SDC has reduced the tax burden on rent for everyone.

Overall, Cyprus retains its status as a jurisdiction with one of the most loyal tax systems in Europe, shifting the focus of support to real residents and transparent investments.