From 1 September, apartments in Cyprus will be subject to VAT under new rules: one detail could cost buyers tens of thousands of euros

The age of the property will no longer play the main role — its usage history will now be decisive

From 1 September 2026, new property taxation rules will come into force in Cyprus. The state will no longer determine whether a property is considered new based on the date construction was completed. The main criterion will now be whether the property has been used systematically for at least 18 months.

No new taxes are being introduced — only the mechanism for determining whether a transaction is subject to VAT is changing.

What has changed

The reform is established by Orders ΚΔΠ 102/2026 and ΚΔΠ 103/2026, which introduce two new concepts: first occupation and first use.

First occupation means any systematic use of a property after construction — by the owner, a tenant or even the developer itself. If the property has been used for at least 18 months, its sale is exempt from VAT. If not, the tax remains applicable.

The five-year rule is a thing of the past

Until now, a property automatically ceased to be considered new five years after construction was completed. From September, this rule is being abolished.

Now, even an apartment built several years ago but never occupied will legally remain new and will be subject to VAT when sold. At the same time, the requirement that the property be used specifically by an «unrelated person» is being removed: any 18 months of actual use will count.

Why identical apartments will now have different prices

Three apartments in the same building may have different tax statuses. One stood empty, the second was rented out, and the third was used as a showroom. They were built at the same time, but from September, it will be the usage history of each apartment, not the age of the building, that matters.

For the buyer, the difference could be substantial. For a property worth €300 000, the tax will be either 0 euros, €15 000 at the reduced rate of 5%, or €57 000 at the standard rate of 19%.

The 5% reduced rate remains

The conditions for the reduced rate on a primary and permanent residence have not changed. The 5% rate applies to the first 130 sq. m of a property worth up to €350 000, provided that the total area of the property does not exceed 190 sq. m and its value does not exceed €475 000. For people with disabilities, the reduced rate applies to the first 190 sq. m.

What has changed is that eligibility for the reduced rate now depends directly on whether the specific apartment is considered new under the new rules.

Renovation has also been affected

The 5% reduced rate on renovations of private homes remains in place, but it can be used only if the property is more than three years old from the date of first occupation and has been used for at least 18 months. If the cost of materials exceeds half the cost of the work, that portion will be subject to VAT at the 19% rate.

What to check before buying

The key question when buying a property is no longer «When was the building constructed?», but rather «How was the apartment used?».

Rental agreements, utility bills and other documents confirming the actual use of the property may determine whether the buyer will have to pay VAT at 5%, 19% or avoid it altogether.

The new rules will affect not only buyers, but also developers, contractors, accountants, tax advisers and lawyers. The first transactions after 1 September will show how the Cyprus Tax Department applies the new system in practice.