Buying a new home to live in? You could pay 5% VAT instead of 19%. Whether you’re Cypriot, from the EU or moving from abroad, here’s how the reduced rate works, how it has changed and what’s coming next.
First, the basics: VAT on property in Cyprus
When you buy a brand-new property in Cyprus directly from a developer, VAT is added to the price. The standard rate is 19%, so on a €300,000 apartment that’s an extra €57,000.
Resale properties (homes that someone has already lived in) don’t carry VAT. Instead, buyers pay land registry transfer fees.
To help people buy a home to live in, Cyprus offers a reduced VAT rate of 5% on a new property that will be the buyer’s main and permanent home. The rate is available to everyone who qualifies: Cypriot citizens, EU citizens and non-EU nationals alike. What matters isn’t your nationality, but whether the home is where you’ll actually live.
Does it apply to me?
Ask yourself one simple question: Will this home be where I live?
✅ You can qualify if:
• the new property will be your main, permanent home in Cyprus, whether you’re buying your first home, moving up to a bigger one, or relocating to the island
• you plan to live there for at least 10 years
• you don’t already own another home in Cyprus that you use as your permanent residence
❌ You won’t qualify if:
• the property is a holiday or second home
• it’s an investment property you plan to rent out
• you’re buying a resale property (no VAT applies anyway)
In these cases, the standard 19% VAT applies to new properties.
How the 5% rate works today
Under the current rules, introduced in June 2023, the 5% rate applies to:
• the first 130 m² of your home, and
• the first €350,000 of its price
As long as:
• the total price is no more than €475,000, and
• the total size is no more than 190 m²
If your home is above either limit, the full 19% VAT applies to the whole price. For homes between 130 m² and 190 m², or between €350,000 and €475,000, the 5% rate applies up to the threshold and 19% applies to the rest.
People with disabilities can benefit from the 5% rate on the first 190 m².
The same rules apply whether you’re buying a new home or building your own.
Example
A buyer purchases a new 110 m² apartment for €300,000 as their main home.
• With 19% VAT: €57,000
• With 5% VAT: €15,000
• Saving: €42,000
If they chose a €500,000 house instead, it would be above the €475,000 limit, so the full 19% rate would apply.
How to apply
• Choose a qualifying new property, ideally within 190 m² and €475,000, or plan your own build within these limits.
• Apply to the Cyprus Tax Department with a declaration that the home will be your main and permanent residence, along with supporting documents. Your lawyer will usually handle this for you.
• Apply in time. If you’re buying, apply before you move in. If you’re building, you can apply during construction.
• Live in the home. The Tax Department carries out checks, so it should genuinely be where you live.
What if my plans change?
If you stop using the property as your main home before 10 years have passed, you won’t lose everything. You only repay the difference between 5% and 19% for the remaining years, and you can apply for the reduced rate again on a new home. This is much fairer than the old rules, which required you to repay the full benefit.
How the rules have changed
The old rules (before June 2023)
The 5% rate used to apply to the first 200 m² of any home, with no limit on price or total size. Even buyers of large villas could benefit. The European Commission challenged Cyprus over this, arguing that the scheme was no longer working as a social measure to help people buy homes, so the rules were tightened.
The transition period
To protect buyers whose projects were already underway, both systems ran side by side for three years:
• The old 200 m² rules still applied to homes whose planning permit was issued, or applied for, by 31 October 2023, with a deadline of 15 June 2026 to apply for the reduced rate.
• In April 2026, Parliament extended this to 31 December 2026 for certain cases where building permits were delayed.
From 1 January 2027, the old scheme will be permanently abolished, and only the new rules will apply.
Last chance: homes still available under the old 200 m² rules
The old rules end on 31 December 2026, but there’s still time. LC Cyppro Realty has selected properties available that may still qualify under the old 200 m² scheme. That means the 5% rate on the first 200 m², with no price or size limit.
This is a rare chance to buy a larger home or a higher-value property and still benefit from the reduced rate. Because eligibility depends on each project’s permit dates, and your application must be submitted by the deadline, time is limited.
Send us a message today, and we’ll help you find a property that qualifies for 5% VAT before the end of the year.
What’s being discussed and what’s new in 2026
• The extension debate: Parliament supported extending the old rules so buyers wouldn’t lose out because of planning delays. Some MPs opposed it, arguing that it could favour expensive developments over genuine homebuyers. This highlights the ongoing question of who the scheme should help.
• A new VAT framework from 1 September 2026: The government changed how it decides whether a building counts as “new” for VAT purposes, introducing the ideas of “first occupation” and “first use” (at least 18 months of regular use).
• Stricter checks: The Tax Department is increasingly checking that people who claim the 5% rate really live in the property.
• The thresholds: With property prices rising, the €350,000 and €475,000 limits set in 2023 now cover fewer new homes, especially in Limassol and other city centres. Many people in the market expect these limits to be reviewed in the future, but no official change has been proposed yet. Plan based on today’s rules.
Our advice for buyers
• Buying a home to live in? Look for a new property within 190 m² and €475,000 to make the most of the 5% rate, or ask us about homes that still qualify under the old rules before 31 December 2026.
• Building your own home? Design it with the thresholds in mind, and apply during construction.
• Buying a holiday or investment home? Budget for 19% VAT on new properties, or consider a resale property instead.
• Always get advice first: Ask your lawyer to confirm your eligibility before you sign.
Let us help you buy with confidence
VAT can make a big difference to the final cost of your home, and understanding it from the start makes all the difference. Whether you’re buying your first home, moving up or relocating to Cyprus, contact us. The LC Cyppro Realty team will show you properties that still qualify under the old rules before the 31 December 2026 deadline, as well as new homes that qualify under the current rules. We’ll explain every cost clearly and connect you with trusted legal and tax professionals who can confirm your eligibility. With experience in the Cyprus market since 1995, we’ll guide you from your first viewing to the day you get your keys.
Message us about qualifying properties →
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