VAT on Property in Cyprus — The Complete Guide
The short answer
New buildings in Cyprus are sold with VAT at the standard 19%. A first residence can qualify for 5% on the first 130 m², as long as that part is worth no more than €350,000, the home is no larger than 190 m² and the total value is no more than €475,000. Renovating a home at least 3 years old can also qualify for 5%. Selling a property? tax.com.cy explains capital gains tax in Cyprus.
- New buildings
- 19%
- First residence and renovation
- 5%
- Reduced-rate value cap
- €350,000
- Maximum total value
- €475,000
Property VAT — Quick Reference 2025/26
New residential build
First sale by developer
Residential resale
Subsequent sales
Home renovation
Home 3+ years old, used as a residence
Commercial property
Sale or taxable rental
Residential rental
Long term let
Commercial rental
Default exempt, option to tax available
Development land
With planning permission
Agricultural land
Without development intent
Construction services
Between contractors
5% Renovation Rate — Eligibility Checker
Answer the 4 questions below to check if you qualify for the 5% reduced rate.
2026 Update: From 1 September 2026, a home counts as first occupied only once it has been in systematic use for at least 18 months. The 5% rate still needs 3 years from that first occupation. For works after 1 September 2026 confirm both before your contractor applies the 5% rate.
Is the property a home used as a residence (it does not have to be your main home)?
Has the property been completed and in use for at least 3 years?
Are the materials worth no more than half of the value of the work?
Is the property used exclusively as a residence with no business use?
Capital Goods Scheme
If you claimed input VAT on a commercial property and its use changes — for example from taxable to exempt — you must repay a proportion of that VAT back to the Tax Department. Conversely if use increases you can claim more back. Tracked annually over 10 years.
Get capital goods scheme advice →Option to Tax
Commercial property lettings are exempt from VAT by default. Landlords can elect to waive the exemption and charge VAT at 19%. This is called the option to tax.
Why opt to tax?
Allows recovery of input VAT on construction, refurbishment and maintenance costs. Essential for new commercial builds with significant VAT on construction costs.
Who benefits?
Landlords with significant construction or fit-out costs. Tenants who are themselves VAT registered can reclaim the VAT charged.
Who loses?
Tenants who are exempt businesses — banks, insurers, doctors — cannot reclaim the VAT and it becomes an irrecoverable cost.
The option to tax decision has long-term consequences — our Cyprus VAT advisory team provides pre-transaction opinions →
Property Developers — VAT Checklist
Review before launch. Check off as you complete each item.
⚠ Important: VAT on property development is one of the highest-risk areas for Tax Department enquiries in Cyprus. A pre-development VAT review typically costs a fraction of a penalty.
Reclaiming VAT on property? Read our complete capital goods scheme guide for the full adjustment rules →
Frequently asked questions
Work out the VAT on your own figures
Add or remove VAT at any Cyprus rate, with the rates from our facts table.
Open the VAT calculator →