Cyprus Implements Property Tax Reform for 2026 to Attract Investors

Comprehensive Tax Reforms Reshape Cyprus Real Estate

On January 1, 2026, Cyprus undertook significant property tax reforms aimed at enhancing its real estate market's attractiveness to international investors. These changes include the abolition of outdated transaction charges and the expansion of capital gains tax exemptions for property exchanges. The reforms are designed to provide increased legal clarity and reduce indirect costs for buyers and owners. By modernizing the tax framework, Cyprus aims to align itself with broader European efforts to enhance compliance through clarity, as highlighted by Anisad's 2026 market analysis.

Impact on Housing Market Amidst Stabilization

Despite these changes, Cyprus's real estate market is experiencing stabilization, with property prices expected to hover around 2025 levels. This trend is linked to both high prices and limited supply, which continue to shape demand. The Cypriot government is addressing the affordable housing issue by constructing 500 homes on state land, an initiative costing approximately €7 million. While housing prices across the EU surged by over 60% between 2013 and 2024, outpacing income growth, Cyprus is keen on maintaining buyer interest without reinstituting incentive schemes. For further insights, the Kathimerini report provides an in-depth look at the housing crisis.

Foreign Property Ownership and New Legislative Proposals

As of January 2026, foreigners can purchase various residential property types in Cyprus, such as apartments and villas. However, non-EU citizens must obtain acquisition permission under Cap. 109. Additionally, mortgage rates for foreigners range from 3.5% to 5.5%, with non-residents facing a higher down payment requirement of 40% compared to 20% for residents. Legislative proposals could tighten restrictions on non-EU property purchases near sensitive areas. This highlights the complexity of foreign property ownership, as detailed by Investropa's ownership guide.

Real Estate Market Performance and Financing Options

The Cypriot real estate market exhibited robust performance in 2025, with property transfers surpassing €4.7 billion. Sales documents increased by 15% compared to the previous year, showcasing the market's vitality. Eurobank's issuance of a €400 million bond with a 4.125% coupon further emphasizes the market's resilience. Current mortgage rates and financing options remain competitive, attracting both domestic and international investors. According to Cyprus Mail, these developments indicate strong investor confidence.

The Cypriot real estate market exhibited robust performance in 2025, with property transfers surpassing €4.7 billion.

Legal Expertise and Transaction Support

For investors navigating the Cypriot property market, legal expertise is crucial. Firms like the George K. Konstantinou Law Firm offer comprehensive services, covering property transactions, immigration, and tax planning. The firm's recognition as the 2019 Immigration and Real Estate Law Firm of the Year underscores its proficiency in the field. As noted by the Konstantinou Law Firm, professional guidance can mitigate risks associated with title deed delays and regulatory changes.

Future Implications for Investors

Looking ahead, Cyprus's property tax reform is expected to bolster the market's appeal to foreign investors by simplifying taxation and reducing transaction costs. However, potential legislative changes could pose challenges for non-EU buyers. RealEstateAbroad.com analysis suggests that careful consideration of mortgage rates, property types, and legal obligations will be essential for making informed investment decisions. The ongoing stabilization of property prices, coupled with government initiatives to address housing affordability, presents both opportunities and challenges for investors in 2026 and beyond.