5% VAT on a New Home in Cyprus: 2026 Rules
A new home in Cyprus carries VAT at 19%. If it will be your main residence, part or all of it can be charged at 5% instead. The saving often runs to tens of thousands of euros, but the limits are strict.
UPDATED 25 SEPTEMBER 2026
VAT arises on new property: usually the sale by a developer, or when you build your own home. Since 1 September 2026, a building counts as new until its first occupation, meaning it has been lived in, used or rented out on a systematic basis for at least 18 months. A private individual selling their own home is normally outside VAT altogether. For the full rule, see When is a building new for VAT?
Who can apply
The reduced rate is for individuals aged 18 or over who are buying or building a home that will be their primary and permanent residence in Cyprus. Companies cannot apply, and neither can anyone buying to rent out or as an investment.
The limits
Under the rules in force since June 2023:
- 5% applies to the first 130 m² of buildable area
- and to a value of up to €350,000
- the home's total buildable area must not exceed 190 m²
- the total transaction value must not exceed €475,000
Within those caps, the part above 130 m² or above €350,000 is charged at 19%. If the home is larger than 190 m² or the price is above €475,000, the reduced rate is lost completely and 19% applies to the whole amount.
For people with a qualifying disability, 5% applies to the first 190 m², whatever the total area.
For families with four or more children, both area limits increase by 15 m² for each child beyond the third. The €350,000 and €475,000 limits do not change.
Two examples
A 120 m² apartment for €300,000. Both limits are met, so all of it is at 5%. VAT is €15,000 instead of €57,000.
A 150 m² house for €350,000. The value is within the limit, but the area is not. The reduced rate covers 130 of the 150 m², so €303,333 is charged at 5% and €46,667 at 19%. VAT is about €24,033 instead of €66,500.
To work out your own figures, use our 5% VAT calculator.
The old 200 m² rules end this year
Before June 2023, 5% applied to the first 200 m², with no limit on total size or value. Projects already in the planning system could keep those rules for a transitional period.
That period has been extended to 31 December 2026 where the planning permit was applied for by 31 October 2023, and the building permit was issued after 1 January 2025 or has not been issued yet. Where the building permit was issued by 31 December 2024, the old rules already ended on 15 June 2026.
From 1 January 2027, only the 130 m² rules apply. If you are buying or building a larger home under a pre-2023 planning permit, this year is the deadline.
The ten-year condition
The home must remain your primary and permanent residence for ten years. If you sell it or rent it out within that period, you must notify the Tax Department within 30 days and repay part of the saving, in proportion to the years remaining.
For example, the €300,000 apartment above saved €42,000 in VAT. Sold after six years, four of the ten years remain, so 40% of the saving is repaid: €16,800.
Applying, and what happens if the invoice comes first
The application is made to the Tax Department, with the contract, the planning documents and proof of residence. Once approved, the developer or contractor charges 5% on the qualifying part.
If an invoice is issued before the approval comes through, it is charged at 19%. When the approval arrives, the developer or contractor issues a credit note for the 14% difference. You get the money back, but in the meantime you have paid it, so it pays to apply as early as possible.
No transfer fees
Where VAT has been paid on the purchase, the Land Registry does not charge transfer fees when the title deed is transferred. If the Land Registry's valuation is higher than the price, fees may be due on the difference only. Keep every receipt showing the VAT paid, because you will need them.
What we suggest
Check eligibility before you sign, not after. The dates on the planning and building permits, the buildable area on the approved plans and the final price together decide which rules apply and how much you pay.
We can check your case, run the calculation and submit the application for you.
Questions we are often asked
Is there VAT on a resale?
Not when a private individual sells their own home. VAT applies to new buildings sold by a developer or other business, before first occupation.
Can a company get the 5% rate?
No. It is only for individuals buying or building their own main residence.
Can I rent the home out?
Not without losing part of the benefit. Renting it out within ten years means notifying the Tax Department and repaying part of the saving.
Does it apply if I build my own house?
Yes. The same limits apply to construction as to purchase.
Do I still pay transfer fees?
No, where VAT was paid, except on any difference between the price and the Land Registry's valuation.
Written by Antonis Lappas, BSc, FCCA. This is general information, not advice on your circumstances. Rules change, check the date on this article, and speak to us before acting on it.