As part of the tax reform planned in the Republic of Cyprus for 2026, the rules governing the taxation of income from residential property sales have been revised. The changes concern Capital Gains Tax (CGT) and include an increase in the amount of profit that is exempt from taxation when selling a property.
CAPITAL GAINS TAX: KEY POINTS
Capital Gains Tax is charged only on the profit made from the sale of a property, not on the full sale price. The applicable tax rate is 20%.
How taxable profit is calculated:
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Purchase price and expenses — the amount paid to acquire the property, plus allowable costs such as renovation expenses, legal fees, and real estate agency commissions, which may be deducted.
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Sale price — the amount for which the property is sold.
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Profit — the difference between the sale price and the purchase price, after deducting eligible expenses. This amount is subject to Capital Gains Tax.
TAX ALLOWANCES
When selling property, part of the profit is exempt from tax:
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up to €150,000 — exemption for the sale of a primary residence*;
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up to €30,000 — standard exemption applicable to any property sale.
Previously, these exemptions amounted to €85,430 and €17,086, respectively.
When calculating Capital Gains Tax, the applicable exemptions are deducted from the profit first, and only the remaining amount is taxed at 20%.
* A primary residence is a house or apartment in which the owner and their family live permanently.
CONDITIONS FOR APPLYING THE TAX EXEMPTIONS
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The increased exemptions will be available until 2030.
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The Capital Gains Tax exemption for a primary residence applies only if the owner has lived in the property for at least five years.
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These tax allowances are granted once in a lifetime, not per transaction. They may be used in full for a single sale or allocated across multiple property sales.
For example, if an owner has already used the standard €30,000 exemption, the remaining tax-free amount available for the sale of a primary residence will be reduced to €120,000.
EXAMPLES
Primary Residence
An owner purchased an apartment for €250,000, lived in it for eight years, and later sold it for €400,000. The resulting profit was €150,000. Since the property qualified as a primary residence and was occupied for more than five years, the entire profit is exempt. As a result, no Capital Gains Tax is payable.
Investment Property
The apartment was held as an investment and rented out. It was purchased for €250,000 and sold for €400,000, generating a profit of €150,000. In this case, only the standard €30,000 exemption applies.
The taxable profit is therefore €120,000 (€150,000 − €30,000). Capital Gains Tax at 20% amounts to €24,000. In practice, the tax liability may be lower if deductible expenses such as renovation costs, legal fees, agent commissions, or registration charges can be claimed.
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