What this covers
You are selling property in Cyprus, or shares in a company that owns property in Cyprus, and you want to know what you will pay. This guide gives you the rate, the exemptions as they stand from 1 January 2026, and the one mechanism that most English language guides skip entirely: indexation allowance, which reduces your taxable gain by the amount of it that is only inflation.
The rule
Capital gains tax is charged at 20% on the gain from disposing of property. Article 4 of Law 52/1980 fixes the rate, and it has one rate only. There are no bands.
It applies to:
- Immovable property situated in Cyprus.
- Shares in companies whose property includes immovable property situated in Cyprus.
- Shares in companies that directly or indirectly participate in a company holding Cyprus immovable property, where at least 20% of the market value of those shares derives from that property. Liabilities are ignored when testing that 20%.
- An agreement for the sale of property situated in Cyprus.
It applies regardless of the tax residence of the company or the individual, subject to double tax treaty provisions. A non-resident selling a Cyprus flat is inside the charge.
Shares listed on a regulated market of a recognised stock exchange are outside the charge entirely.
Watch the boundary with income tax. If your dealing amounts to trading, the profit is taxed as income instead, at income tax rates. The Tax Department publishes ten badges of trade to decide which regime applies: the subject matter of the property, the length of ownership, the frequency of similar transactions, the manner of acquisition, supplementary work done on the property being sold, the circumstances responsible for the sale, the motive, the method of financing the acquisition, how the sale proceeds were used, and the knowledge of the owner.
The lifetime exemptions
Individuals only. Companies and other organisations get none of these. Each can be claimed once in a lifetime, and you choose which sale to use it on. Any unused balance carries forward to a later sale.
From 1 January 2026
| Exemption | Amount |
|---|---|
| General exemption on a gain from disposing of property | €30,000 |
| Gain from disposing of agricultural land by a farmer | €50,000 |
| Gain from disposing of a main residence | €150,000 |
Until 31 December 2025
| Exemption | Amount |
|---|---|
| General exemption on a gain from disposing of property | €17,086 |
| Gain from disposing of agricultural land by a farmer | €25,629 |
| Gain from disposing of a main residence | €85,430 |
The cap almost everyone misses
These are not three separate allowances that add up. The maximum total exemption any taxpayer can ever claim is €150,000 from 2026 onwards, or €85,430 up to 2025.
If you have already claimed one of them, you may claim only the difference between the two. The Tax Department’s own worked case: you sold non-agricultural land and claimed the general exemption, then later sell your main residence.
Maximum exemption still available = €150,000 − €30,000 = €120,000
Article 5(v) of the law says the same thing from the other direction: no person is entitled to both the main residence exemption and the general exemption, only to one of the two, whichever is the greater. So the ceiling is the largest single exemption you qualify for, and anything you have already used comes off it.
Conditions on the main residence exemption
To claim the €150,000 figure the residence must:
- Have been used by the owner for a total period of at least five years, exclusively for own occupation. If this is not the first disposal of a main residence, that period rises to at least ten years.
- Sit on land of up to 1,500 square metres (one and a half dekares).
Two further rules from Article 5(2) that catch people out:
- If the residence sits on more land than 1,500 square metres, tax is charged on the proportion of the gain arising from the land above that limit.
- If you dispose of the residence more than one year after you stopped living in it, no exemption is given at all.
Disposals that are outside the charge
Article 10 defines what counts as a disposal, and then lists what does not. These are exempt, subject to conditions:
- Transfer on death (succession)
- Gifts between spouses, from parent to child, and between relatives up to the third degree
- A gift to a company whose shareholders are, and remain for five years after the gift, members of the donor’s family
- A gift from a family company to its shareholders, where the company also acquired the asset by gift
- Gifts to charities, to the Republic, or to a political party
- An exchange, provided the gain is used to acquire the new property. The gain reduces the cost of the new property and the tax is paid when that is sold
- Expropriations
- Transfers on a company reorganisation
- Transfer of a missing person’s property during its administration
- Transfers between people who have dissolved their marriage
- Transfers arising from a loan restructuring
What you can deduct
This is where the tax is won or lost. There are two separate categories and they are treated differently.
Capital expenditure, which is indexed
Costs of acquiring the property, or of improving it in a way that raised its value:
- Cost of acquisition
- Cost of obtaining planning permission
- Plumbing installation costs
- Land shaping or levelling and earthworks
- Architect’s fee
- Civil engineer’s fee
- Improvement, upgrade or reinforcement costs, for example installing a swimming pool or central heating
Indexation allowance is applied to all of these.
Disposal costs, which are not indexed
Costs of making the sale itself:
- Transfer fees
- Advertising costs
- Valuation costs
- Disposal expenses
- Interest on a loan taken to acquire the property
- Legal fees
- Commission paid to a licensed agent
No indexation is applied to these. They come off at face value.
Indexation allowance, properly explained
Property held for fifteen years is worth more in euros partly because it is worth more, and partly because euros are worth less. Indexation allowance exists so that you are taxed only on the first part.
The Tax Department states the purpose directly: the mechanism adjusts the acquisition price of the immovable property for inflation, so that the gain arising nominally because prices rose over time is not taxed, only the real gain. Article 6(c) of Law 52/1980 says inflation is measured by the retail price index published by the Statistical Service of the Ministry of Finance. Those monthly index values are published in the Inflation Values Table.
Which two index months you use
This is the part that goes wrong most often, and the Department is explicit about both:
| For the | Use the index of |
|---|---|
| Sale date | the month before the sale |
| Acquisition date | the month in which the acquisition, improvement or upgrade actually happened |
The reason for the first rule is practical. The index for the current month does not exist yet at the moment of the sale, because it is computed at the end of the month. So a sale in March 2026 uses the February 2026 index.
The second rule means each item of capital expenditure is indexed from its own month, not from the date you bought the property. A pool built in 2015 is indexed from 2015.
The arithmetic
Each item of capital expenditure is scaled by the ratio of the two index values:
Indexed cost = cost × (index for the month before the sale ÷ index for the month of that cost)
Then:
Gain = sale proceeds − indexed capital expenditure − disposal costs
Two anchors worth knowing. The table’s base is 1 January 1980 = 67.15, and capital gains tax only reaches gains arising from 1 January 1980, so property held since before then is brought in at its 1 January 1980 value as determined by the Department of Lands and Surveys. Article 6 also lets an owner elect the 14 July 1974 market value instead.
Worked example
A flat bought in June 2012, a pool added in May 2015, sold in March 2026.
Index values from the Tax Department’s table: June 2012 = 229.91, May 2015 = 222.19, February 2026 = 258.41. February is used because the sale is in March.
Purchase price, June 2012: €200,000 €200,000 × (258.41 ÷ 229.91) = €224,792.31
Swimming pool, May 2015: €30,000 €30,000 × (258.41 ÷ 222.19) = €34,890.41
Disposal costs, not indexed: agent’s commission €12,000 + legal fees €2,000 + valuation €500 = €14,500
Sale proceeds: €400,000
- €400,000 − €224,792.31 = €175,207.69
- − €34,890.41 = €140,317.28
- − €14,500 = gain of €125,817.28
- − €30,000 general lifetime exemption = €95,817.28 taxable
- × 20% = €19,163.46 of tax
What indexation was worth here. Without it, the deductible cost would be €200,000 + €30,000 = €230,000, giving a gain of €155,500, a taxable amount of €125,500 after the exemption, and tax of €25,100. Indexation saved €5,936.54.
The district office confirms the final figures when it assesses the declaration, so treat your own calculation as the number you check theirs against.
Filing and paying
Article 12: you must file a declaration within one month of the disposal, and in any case before the property is transferred, and pay the tax you have computed. In practice the transfer at the Land Registry is the hard deadline.
- Form T.F.401 is the Declaration of Disposal of Immovable Property, filed at the District Office of the Tax Department.
- Form T.F.402 is the Declaration of Disposal of Company Shares.
- Form T.F.413 is the disposal questionnaire.
Missing the deadline carries a fixed charge of €250 for an individual and €1,000 for a company.
The evidence the District Office asks for is specific. If you are claiming the main residence exemption you must produce your electricity connection certificate and consumption statement from the EAC, which is how the Department tests whether you really lived there. If you are claiming loan interest you need a bank certificate showing the date, amount and purpose of the loan plus the interest payable per year. If you are claiming agent’s commission above 3% to 5% of the sale price, you need the written agreement.
What commonly goes wrong
Using the index of the month of sale. You use the month before the sale. That month’s index does not exist yet when you sell.
Indexing everything from the purchase date. Each improvement is indexed from the month that improvement was made, not from when you bought the property.
Indexing the disposal costs. Agent commission, legal fees, valuation and loan interest are deducted at face value. Indexation applies only to the acquisition and improvement costs.
Treating the three exemptions as cumulative. They are capped at a single €150,000 ceiling from 2026, and anything already claimed reduces what remains.
Assuming a company gets an exemption. The lifetime exemptions are for individuals only.
Losing the main residence exemption by moving out too early. Dispose of the home more than a year after you stopped living in it and the exemption disappears completely.
Forgetting the ten year rule on a second main residence. Five years of occupation is enough only for your first main residence disposal. After that it is ten.
Overlooking the land limit. The exemption covers the residence on up to 1,500 square metres. Gain attributable to land beyond that is taxable.
Assuming a share sale is outside the charge. Selling shares in a company that owns Cyprus property is a disposal, and so is selling shares in a company that indirectly holds it where 20% of the share value comes from that property.
Not keeping the receipts. Capital expenditure only reduces the gain if you can evidence it. Where a building is old and receipts are gone, the Department will accept architectural plans, the building permit, an architect’s certificate of the construction cost, and the EAC’s certificate of first electricity connection, but that is a reconstruction, not a substitute for records.
Missing the one month deadline. The declaration is due within one month of the disposal, and before transfer regardless.
Where to check
The Tax Department’s General Information on Capital Gains page carries the rate, both exemption tables, the exempt disposals list, the allowable expenditure lists and the indexation rule. The Inflation Values Table gives you the monthly index values you need for the calculation. Law 52/1980 is the underlying statute, and the consolidated text on CyLaw shows the current wording of Articles 4, 5, 6, 10 and 12.
Our capital gains tax calculator applies the same arithmetic. Because the figures depend on which index months apply to your dates and on what expenditure you can evidence, have the computation confirmed by a firm licensed to advise in Cyprus before you file.
