Cyprus Just Made Buying a Home Cheaper

Cyprus removed one property tax entirely in 2026 and left the biggest one exactly as it was. A separate set of rules about VAT eligibility shifted too, and it affects resales and older stock more than a purchase straight from a developer. Buying a home already means enough decisions. This reform removes a full tax and leaves the reduced VAT rate untouched, so more of your budget goes toward the home itself, not paperwork.

What happened to stamp duty in Cyprus?

Stamp duty on property purchase contracts is gone. The tax that used to fall due when you signed a sale contract, ahead of VAT and transfer fees, no longer applies to contracts signed from 1 January 2026, under Law 239(I)/2025, which repealed the Stamp Duty Law in full.

One date decides which rule applies to you: when the contract was signed, not when it reaches the Land Registry. A contract signed by at least one party on or before 31 December 2025 still falls under the old rules and must be stamped in the usual window, whether or not it's been lodged yet. A contract signed from 1 January 2026 onward gets the full abolition.

Stamp duty was separate from the transfer fees you still pay on completion.

Is the 5% VAT rate on a new home still available?

Yes. The size and value thresholds set by Law 42(I)/2023 are unchanged: a qualifying primary residence gets 5% VAT on the first 130 square metres and the first €350,000 of value, with 19% on anything above those figures, as long as the whole property stays under 190 square metres and €475,000 in total value. Cross either of those upper limits, and the reduced rate disappears. The full price is taxed at 19%, including the first €350,000 that would otherwise sit under the reduced band.

Take a €400,000 home at 175 square metres. It sits under both upper limits, so you pay 5% on the first €350,000 (€17,500) and 19% on the remaining €50,000 (€9,500). Total VAT: €27,000. Push the same home to 195 square metres, or the price to €480,000, and the calculation changes completely. The reduced rate no longer applies at all, and VAT is 19% on the full price, €91,200 on €480,000.

One thing did change under a separate 2026 decree: how a property's use history is judged before it can claim eligibility. The size and value caps above aren't affected. The next section covers what shifted.

What changed with VAT on "new" buildings from 1 September 2026?

The test for deciding whether a building counts as new for VAT purposes changed. It used to depend on the building's age. Now it depends on how long the building has actually been in use.

Two decrees, R.A.A. 102/2026 and 103/2026, published in the Official Gazette on 27 February 2026, take effect on 1 September 2026. Under the old rule, a building stopped being "new" once five years had passed since completion, or once an unrelated party had used it continuously for 24 months. Under the new rule, a building stops being "new" once it has been in systematic use for 18 months. Age and completion date no longer decide it on their own.

Who counts also changed. The old rule only counted use by someone unrelated to the owner. The new rule counts any systematic use toward the 18 months, whether that's the owner living in it, a tenant renting it, or the developer using it before sale.

This shift matters most for resale of recently completed properties and short-hold investment flips. Because the automatic five-year cut-off is gone, a property that's sat unused can now stay "new," and VAT-able, well past the point it would have quietly gone exempt under the old rule. For a buyer purchasing an off-plan unit from a developer as the first owner, the property is a first supply either way, so the change is less likely to affect the outcome.

Does this affect buying off-plan?

Off-plan purchases benefit from the part of this reform that cuts cost and sit outside the part that complicates resales. Stamp duty abolition lowers the upfront cost of any purchase signed after 1 January 2026, off-plan included. The 5% VAT threshold is unchanged, so a qualifying off-plan buyer pays the same reduced rate as before.

The new 18-month occupation test mainly affects resales and short-hold flips. When you buy an off-plan unit directly from a developer, nobody has occupied it yet. That's a first supply under the old rule and the new one alike, so the reclassification doesn't change your VAT position.

This is one reason buying new construction as the first owner is the more predictable route through this reform. You're not relying on someone else's occupation history or documentation a previous owner may not have kept. At SquareOne, ZOIA and IRIS are both first-supply purchases: you're the first owner, and the VAT position is confirmed before you sign, not worked out afterward.

Is there a deadline to use the older 200 m² VAT scheme?

If your project's planning permission was submitted on or before 31 October 2023, the pre-2023 scheme still applies: 5% VAT on the first 200 square metres, with no separate value cap. That scheme and the 2023 rules have run in parallel since 16 June 2023, but the window to use it is closing.

The original filing deadline was 15 June 2026. In May 2026, the Cyprus Tax Department extended that deadline to 31 December 2026, but only for projects whose building permit was issued after 1 January 2025, or hasn't been issued yet. If your project's permit was issued by 31 December 2024, the original 15 June 2026 deadline already applies. Ask SquareOne which scheme, and which deadline, applies to your unit.

What about sellers and investors?

The reform also touched Capital Gains Tax, which affects sellers more than buyers. Lifetime exemption thresholds increased across the board, effective from 2026: the general exemption rose from €17,086 to €30,000, and the primary residence exemption rose from €85,430 to €150,000. The agricultural-land exemption rose from €25,629 to €50,000.

One change matters more to investors holding property through a company than to individual buyers: the threshold that decides whether selling company shares counts as a property disposal for CGT purposes was cut from 50% to 20% of the shares' underlying value. More share sales now fall inside the CGT net than before.

None of this tells you what you owe without a proper computation. Get a professional CGT calculation before completing any sale, since the figures depend on the property and the owner's history.

Quick reference

• Stamp duty abolished — Effective date: 1 January 2026. Who it affects most: All buyers signing a new contract
• 5% VAT threshold: 130 m² / €350,000, lost entirely past 190 m² / €475,000 — Effective date: Unchanged since 2023. Who it affects most: Buyers of a qualifying primary residence
• "New building" VAT test moves to 18 months' occupation, any occupant counts — Effective date: 1 September 2026. Who it affects most: Resales and short-hold investors most; off-plan buyers from a developer least
• Pre-2023 (200 m²) scheme filing deadline extended — Effective date: 15 June 2026, or 31 December 2026 if permit-delayed. Who it affects most: Buyers on older, permit-delayed projects
• CGT lifetime exemptions increased — Effective date: From 2026. Who it affects most: Sellers and long-term investors

Is stamp duty abolished in Cyprus?

Yes, for property purchase contracts signed from 1 January 2026, under Law 239(I)/2025. Contracts signed by at least one party on or before 31 December 2025 still fall under the old rules, regardless of when they're lodged with the Land Registry.

What is the 5% VAT rate for property in Cyprus?

A reduced 5% VAT rate applies to the first 130 square metres and first €350,000 of value of a qualifying primary residence, with 19% on the remainder, under Law 42(I)/2023. Exceed 190 square metres or €475,000 in total value, and the reduced rate does not apply at all: the full price is taxed at 19%. These thresholds are unchanged in the 2026 reform.

What changed for VAT on Cyprus property in 2026?

From 1 September 2026, the test for whether a building counts as new moved from a time-based rule (age, or 24 months of use by an unrelated party) to a use-based one: 18 months of systematic use by anyone, owner, tenant, or developer.

Do these tax changes apply to off-plan purchases?

Stamp duty abolition applies to any qualifying contract, off-plan included. The VAT threshold is unchanged. The new occupation test affects resales more than a first purchase from a developer, though eligibility should still be confirmed for the specific project.

Is there still a way to use the old 200 m² VAT scheme?

Only if your project's planning permission was submitted on or before 31 October 2023. The filing deadline was extended from 15 June 2026 to 31 December 2026 for projects whose building permit was delayed past 1 January 2025.

This article summarises published legal guidance on the 2026 reform. It is not tax or legal advice. Confirm your own position with a licensed tax adviser or lawyer before signing any contract.

Sources: Law 239(I)/2025 on stamp duty abolition; Law 42(I)/2023 on the 5% VAT scheme; VAT decrees R.A.A. 102/2026 and 103/2026, Official Gazette, 27 February 2026; Cyprus Tax Department's extension of the pre-2023 scheme's filing deadline, May 2026; Capital Gains Tax reform 2026; PwC Cyprus Direct Tax Update N-1-2026.