Cyprus has introduced two bills aimed at providing incentives to property owners who rent out apartments at affordable prices. The measures include significant tax breaks under the “ Renovate-Rent ” program.
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Main provisions of the program
According to the new bill, property owners who rent out their properties at affordable prices will be able to take advantage of the following tax breaks:
- Tax relief : Three years’ relief from income tax, corporation tax and special contribution for defence on rental income.
- Expanded capital deductions up to 20%.
To qualify for the program, rents must be at least 30% below market rates. The Interior Ministry plans to publish detailed lists of market rates on its website and affordable rental platform, categorizing data by neighborhood, municipality, and property type.
Changes in the capital allowance rate
In addition, new measures increase tax breaks:
- For buildings : from 3% to 5%.
- For equipment and machinery : from 10% to 15%.
These incentives apply to purchases made between 2024 and 2027 and are available to both individual landlords and businesses.
Tax incentive expenses
The tax breaks are expected to cost the government €1.75 million annually, or €5.25 million over three years. Additionally, it is proposed to amend the Special Contribution for Defence Act to remove the 3% rental income tax on properties rented out under the scheme. This would result in an additional cost of €100,000 annually, or €300,000 over three years.
Requirements for tenants
To qualify for the program, tenants must meet income requirements and cannot be related to the property owner. Annual income limits are set as follows:
- Single tenants : up to €25,000.
- Couples or single-parent families of two : up to €45,000.
- Families of three : up to €50,000.
- Families of four : up to €55,000.
- Families of five or more people : up to €65,000.
These measures aim to increase affordable rentals on the market and provide financial incentives to property owners. The Renovate-Rent program is part of Cyprus’s broader strategy to support tenants and develop an affordable rental market.
