2026 Tax Reforms Slash Costs and Boost Exemptions

As of January 1, 2026, Cyprus has officially launched a sweeping overhaul of its property tax framework. This legislative package represents a strategic shift toward lower transaction barriers, updated capital gains rules, and a more robust compliance system. According to an analysis by Property News Cyprus, the reforms are designed to revitalize market liquidity while bringing the island’s property-related taxes into the modern era.

Buyer and Investor Relief: The End of Stamp Duty

The most immediate benefit for property purchasers is the total abolition of stamp duty on contracts, share transfers, and most legal instruments.

By removing this longstanding transactional friction, the government aims to make property acquisition more affordable and attractive to both domestic buyers and international investors. This change is expected to significantly increase the speed and volume of transactions across the island.

Significant Gains for Sellers: Enhanced Exemptions

Sellers are also set to benefit from a substantial increase in lifetime Capital Gains Tax (CGT) allowances. These adjustments reflect the rising property values seen across Cyprus over the last decade.

Note: The primary residence exemption requires a five-year occupancy period.

Modernizing the “Antiparochi” System

The reform introduces a major incentive for landowners and developers through the Property Swap (Antiparochi) exemption. Under the new rules, exchanging land for completed units is now entirely exempt from the standard 20% CGT, provided the construction project is finalized within a five-year window. This measure is likely to stimulate new development and offer a potential pathway for owners of “trapped” properties to trade their holdings for compliant, completed units.

Closing the Loophole: “Property-Rich” Companies

To prevent tax avoidance via corporate structures, the definition of a “property-rich” company has been tightened. Previously, CGT was only triggered if 50% of a company’s value came from Cyprus real estate. As of January 2026, this threshold has been lowered to 20%. This means more share disposals will now be subject to local capital gains taxation.

Stricter Oversight and Transparent Rentals

The reform is not just about relief; it also grants the Tax Commissioner unprecedented authority to ensure compliance.

• Audit Powers: The Commissioner can now override bank confidentiality during investigations and demand full asset declarations.

• Blocked Transfers: Property transfers can be halted if any party involved has outstanding tax obligations.

• Traceable Rent: Starting July 1, 2026, all monthly rent payments exceeding €500 must be made via bank transfer or other electronic methods. This move is designed to bring the rental market into the formal economy.

The “Mansion Tax” Debate

While many charges have been removed, a new “Mansion Tax” is on the horizon. A proposal currently before Parliament suggests an additional levy on high-value estates worth over €3 million. However, it is important to note that this is still a legislative proposal and not yet active law. Meanwhile, the national Immovable Property Tax (IPT) remains abolished, though owners are still responsible for local municipal fees (typically between €90 and €300 annually).

Source: Property News Cyprus