Capital Gains Tax on Cyprus Real Estate: increased exemptions applicable from 1 January 2026
1. Overview of Capital Gains Tax in Cyprus
Capital Gains Tax (CGT) in Cyprus is levied at a rate of 20 percent on gains arising from the disposal of immovable property situated in the Republic, as well as from the disposal of shares in companies which own such immovable property, subject to statutory conditions. The tax is imposed on the net gain, namely the difference between the disposal proceeds and the adjusted acquisition cost, after deducting allowable expenses and exemptions.
CGT is governed by the Capital Gains Tax Law, as amended from time to time, and applies primarily to natural persons, although certain corporate disposals may also fall within scope depending on the structure involved.
2. Legislative reform effective from 1 January 2026
As part of the wider tax reform approved in late 2025, Cyprus has introduced significant increases to the lifetime CGT exemptions applicable to disposals of immovable property. These amendments apply to disposals completed on or after 1 January 2026.
The reform does not abolish or replace the existing exemption framework. Instead, it increases the exemption thresholds, thereby reducing the taxable base and, in many cases, materially lowering the CGT payable.
3. New increased CGT exemptions from 2026
From 1 January 2026, the following lifetime exemptions apply:
• General exemption on disposal of immovable property: €30,000
• Disposal of a primary residence, subject to conditions: €150,000
• Disposal of agricultural land by a professional farmer: €50,000
These amounts are deducted from the taxable gain and operate as exemptions reducing the CGT base. They do not constitute tax credits and are not deducted from the sale price. Importantly, no previous exemptions are lost. The reform increases the allowable thresholds within the existing framework.
4. Lifetime nature of the exemptions and interaction between them
CGT exemptions in Cyprus are lifetime exemptions. This means that they are not available per transaction but are applied cumulatively over the lifetime of the taxpayer.
In practice, this has important consequences. For example, where the general exemption of €30,000 has already been fully utilised in a previous disposal, the available exemption for a future disposal of a primary residence may be reduced accordingly. Careful historical review is therefore required before completing a transaction, particularly where multiple disposals have taken place over time.
5. Primary residence exemption of €150,000
The increased exemption of €150,000 applies to the disposal of a taxpayer’s primary residence, provided that statutory conditions are satisfied. In practice, the tax authorities assess whether the property genuinely constituted the main residence of the disposer, based on factual and documentary evidence.
Typical factors examined include actual occupation, duration of residence, utility bills, tax residency indicators and other supporting documentation. Where the gain does not exceed €150,000, no CGT is payable. Where the gain exceeds this amount, CGT is imposed only on the excess.
6. Agricultural land and professional farmers
A separate increased exemption of €50,000 applies to disposals of agricultural land by professional farmers. The critical element is not solely the zoning or classification of the land, but also the status of the disposer as a professional farmer at the time of disposal.
Evidence of professional agricultural activity is therefore essential. Without proper substantiation, the exemption may be challenged or denied.
7. Effective date and transitional considerations
The new exemption thresholds apply strictly to disposals completed from 1 January 2026 onwards. Transactions completed before that date remain subject to the pre-2026 exemption limits.
For transactions close to the year-end, the timing of the disposal is crucial. Depending on the circumstances, this may involve an assessment of when legal ownership is transferred or when the disposal is considered complete for CGT purposes. Early structuring and timing analysis can therefore have a decisive impact on the tax outcome.
8. Illustrative examples
Example 1: general exemption
Net gain on sale of property: €80,000
Less general exemption: €30,000
Taxable gain: €50,000
CGT at 20 percent: €10,000
Example 2: primary residence
Net gain on disposal of main residence: €140,000
Primary residence exemption available: €150,000
Taxable gain: €0
CGT payable: €0
Example 3: prior use of exemptions
Where a taxpayer has already utilised the full general exemption in earlier years, the remaining available exemption for a later disposal of a primary residence may be reduced accordingly, depending on the cumulative use of lifetime exemptions.
9. Practical implications and planning points
The 2026 reform substantially improves the CGT position for individuals disposing of Cyprus real estate, particularly owner-occupiers and agricultural landholders. However, the lifetime nature of the exemptions, their interaction, and the strict application date mean that careful planning remains essential.
Before proceeding with a disposal from 2026 onwards, it is advisable to review the taxpayer’s historical use of CGT exemptions, confirm eligibility for primary residence or agricultural status where relevant, and ensure that the timing and documentation of the transaction are properly aligned with the new framework.
10. Conclusion
From 1 January 2026, Cyprus offers materially enhanced CGT exemptions of €30,000 for general disposals, €150,000 for primary residences and €50,000 for agricultural land disposed of by professional farmers. These exemptions operate as deductions from the taxable gain, reducing or, in many cases, eliminating CGT exposure.
The reform strengthens Cyprus’ position as a predictable and attractive jurisdiction for real estate ownership and long-term planning, while continuing to require disciplined compliance and accurate structuring to secure the intended tax outcome.
In light of the 2026 Capital Gains Tax reforms and the increased lifetime exemptions applicable to disposals of immovable property, careful legal and tax coordination is essential to ensure that the available reliefs are correctly applied and fully secured. Errors in timing, documentation or exemption history can materially alter the tax outcome of a transaction.
Our law firm provides end-to-end support for real estate disposals and structuring in Cyprus through an integrated legal and accounting approach. In practice, this includes:
• Legal due diligence on immovable property prior to disposal
• Legal structuring and timing analysis in view of the 1 January 2026 CGT amendments
• Verification of eligibility for primary residence and agricultural exemptions
• Review of historical use of lifetime CGT exemptions
• Drafting and review of sale agreements and ancillary documentation
• Liaison with the Land Registry and other competent authorities
• CGT computation and optimisation based on statutory deductions and exemptions
• Preparation and submission of CGT declarations to the Cyprus Tax Department
• Coordination of accounting records supporting acquisition cost, improvements and allowable expenses
• Post-completion compliance and advisory support
By combining legal analysis with in-house accounting expertise, we ensure that real estate transactions are not only legally sound but also tax-efficient and fully compliant with the post-2026 Cyprus tax framework. This integrated approach provides clients with clarity, certainty and effective risk management throughout the lifecycle of a property disposal.
