Cyprus Extends Reduced 5% VAT on Real Estate Until the End of 2026

On April 16, the Parliament of Cyprus officially confirmed the extension of the reduced 5% VAT rate for the purchase of a first home until the end of 2026. This is important news for those planning to buy property in Cyprus for living, investment, or obtaining residency.

The standard VAT rate on real estate in Cyprus is 19%; however, if certain conditions are met, buyers may qualify for a reduced rate of only 5%. The extension guarantees that the current transitional regime will remain in force until the end of 2026, giving eligible buyers additional time to benefit from favorable tax conditions when purchasing their primary residence.

Who Can Qualify for 5% VAT in Cyprus

The reduced VAT rate applies when purchasing a primary residence in Cyprus.

Main conditions:

• the property is purchased for permanent residence;
• the benefit applies to the first 200 m² of the property;
• the buyer must not own another primary residence in Cyprus;
• the property must be retained in ownership for at least 10 years.

How VAT in Cyprus Will Change from 2027

Starting from January 1, 2027, new VAT rules will come into force in Cyprus in accordance with EU requirements.

Main changes:

• the 5% VAT rate will apply only to the first 130 m²;
• the area from 131 m² to 190 m² will be subject to 19% VAT;
• requirements for obtaining the benefit will become stricter.

This means that purchasing larger real estate properties will become more expensive.

For a complete overview of all applicable taxes, benefits, and investment structuring strategies, please refer to our detailed guide “Property Taxes in Cyprus 2026”.

VAT Calculation Example: 2026 vs 2027 in Cyprus

To better understand the impact of the upcoming changes, let us consider an example comparing real estate taxes in Cyprus in 2026 and 2027.

Scenario:

• Property value: €350,000
• Area: 140 m²
• Purpose: primary residence
• Buyer qualifies for the reduced 5% VAT program

Thus, the extension of the transitional regime until the end of 2026 gives buyers additional time to complete the purchase of a first home in Cyprus under significantly more favorable conditions. This is an opportunity to reduce VAT expenses, preserve the investment attractiveness of the transaction, and acquire property before the new rules come into effect in 2027.

Assistance with Buying Property in Cyprus

Buying property in Cyprus requires not only selecting the right property but also proper legal structuring of the transaction. It is important to conduct professional property Due Diligence, verify documents, assess potential risks, and correctly arrange all tax benefits, including the 5% VAT rate.

Feod Group has been supporting real estate transactions in Cyprus for more than 17 years and helps foreign buyers safely acquire apartments, houses, and investment properties with full legal support.

Our specialists assist clients with:

• conducting full legal due diligence of the property;
• verifying documents and the Title Deed;
• safely preparing the sale and purchase agreement;
• properly structuring the transaction in accordance with Cyprus legislation requirements.

Such a comprehensive approach reduces risks and helps clients make secure decisions when buying property in Cyprus.

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