Real estate sales in Cyprus in 2026 are governed by updated tax legislation, which significantly expands opportunities for legally minimizing payments. Capital Gains Tax (CGT), fixed at 20%, remains the primary tax instrument for property sales. However, thanks to recent reforms, the structure of tax deductions and lifetime exemptions has become significantly more favorable to sellers. This makes exiting investment projects more profitable, especially for owners of primary residences and large plots of land.
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A radical increase in lifetime tax breaks
Beginning in 2026, new thresholds for lifetime capital gains tax exemptions came into effect in Cyprus, allowing sellers to retain a significantly larger portion of their profits. The general exemption, available to each individual once per lifetime, was increased from the previous €17,086 to €30,000. For those selling agricultural land, the threshold rose from €25,629 to €50,000. The most significant change affected owners of primary residences: the exemption for the sale of a primary residence (provided it has been owned for at least five years) increased from €85,430 to a substantial €150,000. These changes significantly reduce the tax burden on individuals and make the market for finished homes more liquid.
Important adjustments also affected the corporate sector that owns real estate assets. The updated definition of real estate has expanded the scope of capital gains tax on the sale of shares. Previously, the tax was applicable if more than 50% of a company’s market value was indirectly secured by real estate in Cyprus. Now, this threshold has been reduced to 20%. Therefore, even if the shareholding of real estate in a company’s assets is relatively small, the sale of shares will be subject to taxation in the Republic. This change is aimed at increasing the transparency of asset transactions and preventing tax evasion through complex corporate structures.
Inflation adjustment and recognized expenses
Despite the benefits, the taxable base is still calculated based on the difference between the purchase and sale prices. However, the law allows for the deduction of inflation from this amount. The acquisition price of the property is indexed according to the official Consumer Price Index (CPI) for the entire ownership period, protecting the seller from taxation of “paper” profits arising from currency depreciation. Furthermore, all documented capital expenditures on the property are deductible from the profit: reconstruction, expansion, installation of modern energy-saving systems, and legal costs associated with the transaction. Effective 2026, the taxable percentages will also be revised downwards, further stimulating market activity.
The Tax Clearance Process and Closing the Deal
No property transfer in Cyprus can be completed at the Land Registry without obtaining a Tax Clearance Certificate. To obtain this, the seller submits a declaration to the Tax Department immediately after signing the contract. Since 2026, this process has been fully digitalized, allowing for the receipt of a tax calculation and payment confirmation as quickly as possible. The tax officer verifies the claimed deductions and applies the seller’s available lifetime benefits. Only after the receipt of the CGT payment does the Registry finally transfer the property to the new owner.
Taxation of inheritance and gifts
It’s important to remember that not all property transfers are subject to capital gains tax. Gifts of real estate between first- and second-degree relatives (for example, from parents to children or between spouses) remain exempt from this tax. The same applies to inheritance of property. However, if such a property is subsequently sold by a new owner, the gain will be calculated based on the original owner’s historical acquisition cost, unless the new, increased exemptions of 2026 apply. Carefully documenting all property expenses over the decades of ownership remains the key to minimizing taxes upon its eventual sale.
