From 1 January 2026, Cyprus introduced a series of tax reforms that directly affect sale and purchase transactions of immovable property. These changes do not just adjust technical tax rules – they change the costs, structure and timing of real estate transactions.
For anyone planning to purchase or sell immovable property, it is important to understand what has changed and how it may impact their plans. While the reform covers many areas of taxation, this article focuses only on the changes that directly affect property transactions.
For real estate, this translated into two headline measures:
- Abolition of stamp duty under the Stamp Duty Laws; and
- A reshaping of the Capital Gains Tax (CGT) rules, including higher exemptions and a wider net for indirect property disposals.
Why the reform was introduced
The reform aims to make the system fairer and more transparent. In particular, it seeks to:
- modernise the tax framework and align it with current market conditions,
- improve tax transparency and compliance, and
- close structural loopholes in real estate transactions and to simplify procedures and make compliance more efficient.
Stamp duty on property contracts – abolished for new deals
One of the most noticeable changes is the abolition of stamp duty under the Stamp Duty Laws, with effect from 1 January 2026.
How it worked before
Stamp duties were paid on all Contracts at Inland Revenue and were calculated according to the purchase price.
How it works now
Sale contracts signed on or after 1 January 2026 are not subject to stamp duty, and no calculation or stamping procedure is required.
Contracts signed on or before 31 December 2025 remain subject to the previous stamp duty regime and must be stamped accordingly.
Impact on buyers and sellers
- Lower upfront costs for the buyers.
- Simpler procedures, with no stamping formalities required.
- No penalties for late stamping.
- Smoother process overall, with fewer administrative steps following the signing of the contracts.
Capital gains tax (CGT) – higher lifetime exemptions
Capital Gains Tax (CGT) is a tax imposed on the profit realised from the sale of immovable property in Cyprus. The gain is generally calculated by taking the sale price and deducting the original acquisition cost and certain eligible expenses, such as improvement costs, transfer fees, legal fees, registered estate agent’s fees and indexation for inflation.
Individuals are also entitled to lifetime allowances, which reduce the taxable gain and vary depending on the type of property being sold (for example, a main residence or agricultural land).
The tax reform also modernises the CGT regime by increasing the lifetime allowances, thereby reducing the overall CGT burden for many individuals selling property
The thresholds have been increased as follows:
- General personal exemption increased from €17,086 to €30,000.
- Agricultural land exemption increased from €25,629 to €50,000.
- Main residence exemption increased from €85,430 to €150,000, subject to the applicable conditions and supporting evidence.
These apply to disposals executed under contracts signed from 1 January 2026 onwards. For contracts signed prior to 1 January 2026, the previous Capital Gains Tax rules and exemption thresholds will continue to apply.
Impact on sellers
For many private property owners, the increased exemption thresholds mean that a larger portion of the gain will now fall outside the scope of CGT. In practice, this results in less CGT being payable and makes the sale of residential property more tax-efficient under the new tax regime.
CGT – wider net for share-based transactions
Real estate in Cyprus is frequently held through companies. Under the old regime, CGT applied to the sale of shares where more than 50% of the value was derived from Cyprus immovable property.
Under the new rules, CGT the threshold has been reduced to 20%, meaning that CGT will now apply to share disposals in companies where at least 20% of their value relates to Cyprus property. As a result, a wider range of “property-rich” share transactions are now captured by the CGT regime.
Impact – who is affected and how?
This change mainly affects property owners, investors and developers who hold real estate through companies. Because the CGT threshold has been reduced to 20%, more share transfers will now be treated as property transactions and may trigger CGT, even where the property itself is not transferred directly.
For buyers, this change increases the importance of tax and valuation due diligence when acquiring shares in companies that hold real estate, as potential CGT exposure may arise within the structure.
Compliance considerations at completion
The reform also strengthens the compliance element of real estate transfers by giving the Tax Commissioner clearer powers to delay or prevent the transfer of immovable property where tax returns or liabilities remain outstanding.
This is not a new concept, but rather an enhancement of the existing requirement for tax clearance, making compliance checks more explicit and enforceable.
CGT – property swap transactions
The amended CGT regulations extend the existing relief for property swap transactions, allowing relief to apply where immovable property is exchanged or received as consideration, rather than cash.
How it worked before
Under the previous regime, CGT relief on property swap transactions was limited and narrow in scope. In most cases – particularly where a landowner contributed land to a developer and received completed units in return – the transaction could trigger a CGT liability, even though no cash changed hands and the landowner had not yet realised any liquidity to pay the tax.
How it works now
The reform broadens the availability of relief to cover a wider range of property swap transactions and consideration-in-kind arrangements involving immovable property, provided statutory conditions are met. This modernises the treatment of non-cash property transactions and recognises the commercial reality of how many development projects are now structured.
Impact
This amendment is considered a positive development as property swap transactions have grown significantly in recent years. The reform removes the upfront CGT burden on such arrangements and provides parties with greater flexibility in structuring non-cash property deals.
Conclusion
The 2026 tax reform introduces significant tax regime changes in property transactions. The abolition of stamp duty reduces the upfront costs of entering into a transaction and simplifies the process for buyers. At the same time, the changes to the Capital Gains Tax regime reduce the effective tax burden on many individuals selling property, extend CGT to a wider range of share deals involving real estate, and provide greater flexibility for developers to structure land-for-units and similar non-cash transactions without an immediate tax liability where certain conditions are met.
For buyers and sellers, these changes can create opportunities to reduce costs and simplify transactions, but they also highlight the importance of planning ahead. Obtaining legal at an early stage allows parties to identify any issues early, make informed decisions and take full advantage of the reliefs and opportunities available under the new tax regime where applicable.
Maria Kokoridi
Senior Associate at Philippou Law Firm