What is Capital Gains Tax in Cyprus? Everything You Need to Know (2026 Update)
Our blogs are regularly updated to ensure information is current and accurate.
Andreas is a Corporate Lawyer and Managing Director of EasyCorporate. Read more
Who Does Capital Gains Tax in Cyprus Apply To?
Capital Gains Tax in Cyprus applies to individuals and companies that profit from the sale of immovable property located in Cyprus. The tax is charged at a flat rate of 20% on the taxable profit.
It also applies to the sale of shares in a company that owns property in Cyprus, provided that at least 20% of the company's market value derives from immovable property.
It does not apply to:
- Shares listed on any recognised stock exchange
- Certain exempt transfers (inheritances, gifts between relatives, and others outlined below)
If you're selling a property in Cyprus and you'll make a profit, you'll have to pay Capital Gains Tax.
How to Calculate Capital Gains Tax in Cyprus
Since capital gains tax is only applicable on profit, the first step is to find the taxable profit from the sale of a property.
Simply put, the taxable profit is the difference between the price the property is being sold today versus the price the property was originally purchased for, plus any additional costs such as renovation costs, legal fees etc, plus any of the lifetime allowances if requirements are met.
Sale Price - (Purchase Price + Additional Costs + Lifetime Allowance) = Taxable Profit
Taxable Profit x 20% = Capital Gains Tax
Purchase Price (Adjusted for Inflation)
To find the difference between the price a property is being sold for today versus the price it was originally purchased for, you can't simply deduct the purchase price from the current sale price.
If you bought a house for €100,000 in 1985, that amount of money doesn't have the same value today because of inflation.
Inflation makes money lose its purchasing power over time, so €100,000 in 1985 could buy more than €100,000 can today. To find out how much that house would cost in today's money, we must first adjust for inflation, showing the true value in today's terms.
You can find a table of Inflation Rates released and updated by the Tax Department here.
Keep in mind that if you bought your property before the 1st of January 1980, the original cost of that property is considered to be its value as of the 1st of January 1980. That value is based on the valuation of the Land Registry.
To find the the inflation-adjusted purchase price you must:
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Divide the Inflation Rate in the year of sale by the Inflation Rate in the year of purchase. This gives us the inflation adjustment number.
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Then, multiply the original purchase price by the inflation adjustment number. This gives you the adjusted purchase price.
For example:
Say you bought a house in January 1985 for €100,000 and you sold it in January 2026.
The Inflation Rate in 1985 was 97,68 while the Inflation Rate in January 2026 was 258,73. Dividing 258,73 by 97,68 gives us 2.64875 (inflation adjustment number).
Finally, multiplying €100,000 (original price) by 2.64875, gives us €264,875, and that is the purchase price of your house adjusted for inflation.
Adding Additional Expenses to Your Taxable Profit
Once you have found the purchase price adjusted for inflation, you should then add to the deductible amount any additional expenses that you incurred in relation to the property that were made exclusively for making a profit, provided that these expenses were not deducted from your then income tax returns.
This can include renovations that increase the value of a house and any expenses related to the sale of a house such as transfer fees, real estate commissions, legal fees, interest on loans and others.
Again, you can adjust these expenses to account for inflation to find the inflation-adjusted expenses:
-
Divide the Inflation Rate in the year of sale by the Inflation Rate in the year the expenses were made. This gives us the inflation adjustment number.
-
Then, multiply the original cost of expenses by the inflation adjustment number. This gives you the adjusted expenses.
For example:
Say you made some renovations to your house in January 1996 that cost €20,000, and you sold your house in January 2026.
The Inflation Rate in 1996 was 148,32 while the Inflation Rate in January 2026 was 258,73. Dividing 258,73 by 148,32 gives us 1.7444 (inflation adjustment number).
Finally, multiplying €20,000 (original cost of expenses) by 1.7444, gives us €34,888, and that is the cost of the renovation of your house adjusted for inflation.
Lifetime Allowances and Their Impact on Capital Gains Tax
Finally, individuals are entitled to lifetime allowances which can also be added to the deductible amount before calculating the amount subject to Capital Gains Tax.
Particularly, there are three types of allowances which an individual can claim. As of January 2026, these are:
| Allowances | € |
|---|---|
| Sale of a Primary Residence | €150,000 |
| Sale of Agricultural Land by a Farmer | €50,000 |
| Any Other Sale | €30,000 |
Although it is possible to combine the above allowances, an individual cannot exceed the combined amount of €150,000. Additionally, you can only claim it once in your life.
Example
Using all variables, we can accurately calculate the capital gains tax payable upon the sale of a property in 2026.
Following the previous examples:
Sale Price - (Purchase Price + Additional Costs + Lifetime Allowance) = Taxable Profit
Taxable Profit x 20% = Capital Gains Tax
Say you sold your house in January 2026 for €500,000.
Using the scenario above, you bought your house in January 1985 for €100,000.
Purchase Price Adjusted for Inflation = €264,875
Moreover, you had renovations in your house in January 1996 that cost €20,000.
Additional Expenses Adjusted for Inflation = €34,888
Finally, this is the first time you are selling a property and your house is your primary residence. So you can claim the relevant lifetime allowance.
Lifetime Allowance = €150,000
Therefore:
€500,000 - (€264,875 + €34,888 + €150,000) = €50,237 (Taxable Profit)
€50,237 x 20% = €10,047.4 (Capital Gains Tax)
So, in the above scenario you'd have to pay €10,047.4 in capital gains tax for the sale of your house.
Capital Gains Tax Exemptions in Cyprus
There are also some exemptions to Capital Gains Tax in Cyprus, meaning that in certain cases, the transfer of property is not subject to Capital Gains Tax. These exemptions include:
| Exemptions | Description |
|---|---|
| Transfer by death | When property is transferred due to the death of the owner. Such as in cases of inheritance. |
| Gifts between Close Relatives | Gifts made between parents and children, spouses, or close relatives (up to the third degree). |
| Foster Parents | Gifts made between s foster parent to a foster child. |
| Property exchanges | Provided that the value of the two properties being exchanged is the same. |
| Land for Apartment / Land for Development Exchange | Exchanges made with a licensed land developer, provided the development is completed within 5 years from the date of the agreement. |
| Gifts to a company owned by family members | Gifts to a company, where all shareholders are family members, are exempt if five years after the gift is made, the shareholders are still members of the family of the person who made the gift. |
| Gifts from a company owned by family members to a shareholder | Gifts from a family-owned company to a shareholder are exempt if the property was originally gifted to the company. |
| Gifts to the Republic or for charitable purposes | Gifts to the government or gifts towards educational, cultural, or charitable purposes to any approved charitable organisation. |
| Agricultural land under conditions | Exchange or disposal of immovable property under the Agricultural Land (Consolidation) Laws. |
| Transfer of property or company shares due to reorganisation | Property transfers during company reorganisations and transfers of shares during company reorganisations, where shares are exchanged for other shares. |
| Property transfer between divorced spouses | Property transfers between divorced spouses as part of a property settlement. |
| Shares listed on a recognised stock exchange | The transfer or disposal of shares listed on any recognised stock exchange. |
Key Takeaways on Cyprus Capital Gains Tax
- Tax rate: Capital Gains Tax in Cyprus is charged at a flat 20% on taxable profit
- What's taxed: Only profits from the sale of immovable property in Cyprus, or shares in property-owning companies where 20%+ of market value is immovable property
- Inflation adjustment: Your original purchase price and eligible expenses can be adjusted for inflation, reducing your taxable profit
- Lifetime allowances: Up to €150,000 for a primary residence, €50,000 for agricultural land, and €30,000 for any other sale. Claimable once in your lifetime
- Exemptions: Transfers by death, gifts between close relatives, and property exchanges of equal value are among the key exemptions
If you're thinking about selling your property but you worried about the 20% Capital Gains Tax, Contact Us Today for a free consultation and we'll advise you on how you can reduce this amount as much as possible.
Our blogs are regularly updated to ensure information is current and accurate.
FAQ: Common Questions About This Topic
I'm planning to sell multiple properties this year, how do the lifetime allowances work?
While you can sell multiple properties, you can only claim the lifetime allowances once. It's strategic to use them on your highest-value sale. For example, if you're selling both a primary residence and an investment property, consider timing the sales to maximize your €150,000 allowance on the property with the highest potential tax liability.
What happens if I've claimed some renovation expenses on my income tax returns?
If you've previously claimed renovation expenses as deductions on your income tax returns, you cannot use these same expenses to reduce your Capital Gains Tax. Keep detailed records of which improvements were claimed on income tax and which weren't to avoid double-dipping.
I bought my property with a friend, how does Capital Gains Tax work for co-owned properties?
Each co-owner's tax liability is calculated separately based on their ownership share. You each get your own lifetime allowance, and your portion of the purchase price and expenses are adjusted for inflation individually. This means strategic planning is possible if one owner has already used their lifetime allowance.
If I sell my property in installments, when do I pay the Capital Gains Tax?
Capital Gains Tax becomes due when you transfer the property title, not when you receive all payments. However, you might be able to structure the sale to optimize your tax position.
What proof do I need to show for renovation expenses from many years ago?
Keep all receipts, contracts, and bank statements showing payments. If you've lost old receipts, the tax office may accept other evidence like before-and-after photos, contractor statements, or building permits. Document everything thoroughly as you go to avoid future issues.
I'm thinking of transferring my property to a family company, what are the downsides?
While transfers to family-owned companies are exempt, you must maintain family ownership for five years after the transfer. Any change in shareholding to non-family members within this period could trigger Capital Gains Tax retrospectively. Plan carefully for potential future business changes.
How do property valuations work for non-cash transactions?
For property exchanges or transfers at below market value, the tax office uses their own valuation methods to determine fair market value. Getting an independent valuation before the transaction can help you anticipate and plan for potential tax implications.
If I reinvest my property sale profits into another property, do I still pay Capital Gains Tax?
Unlike some countries, Cyprus doesn't have a tax-free rollover relief for reinvesting property profits. You'll still need to pay Capital Gains Tax on your profit even if you immediately use the money to buy another property, unless it's a direct property exchange of equal value.