A Guide to Returns on Cyprus Real Estate Investment

Returns on real estate in Cyprus have historically been at the lower end. However, since the 2013 financial crisis and subsequent bail-out (and bail-in), many foreign investors have been encouraged to invest in the Cyprus real estate market with demand consistently rising.

If you are a foreign investor interested in the prospect of investing in Cyprus properties and obtaining a Cyprus Golden Visa, we’ll break down returns on a Cyprus real estate investment for all property types and how it can also lead to residency.

Overview of Cyprus Real Estate Returns

Real estate returns are the income of a property let on the open market (i.e., rental income) as a proportion of the property’s prevailing market value.

Prior to the 2008 real estate crisis, there was a healthy capital appreciation for most properties, amounting to a five to seven percent annual yield at the time.

Today returns on Cyprus real estate on residential properties like apartments and houses are around five percent. The rental value is growing, and offices and villas are the leading attractions.

Nonetheless, year-on-year property prices have steadily increased; here are some examples based on sales data from the Central Bank of Cyprus (CBC).

By district, this is how prices look in 2024:

• Nicosia: Cyprus’ capital saw the price for apartments decrease by 0.2 percent
• Limassol: Residential property prices decreased by 1.5 percent
• Larnaca: Residential property prices decreased by 2.2 percent
• Paphos: The price for apartments saw a strong rise of 3.1 percent
• Famagusta: Property prices rose by a robust 4.4 percent

Are rental levels in Cyprus sustainable?

Rental prices in Cyprus, especially in the most densely populated areas, are in high demand from both locals and foreign investors.

Even though this is a good sign for potential investors, they may be unsustainable for some tenants, especially those with lower incomes. If housing supply continues to lag behind demand and wages don’t increase, rental affordability could worsen, raising concerns about long-term sustainability.

Rental Returns from Cyprus Real Estate

Foreign buyers with investment property in Cyprus or those looking to buy property in Cyprus can expect moderate rental returns ranging from 3.8 to 5 percent for all property types, such as luxury homes and villas to townhouses, apartments, and commercial property.

Due to a sustained period of solid property demand, apartment prices in Cyprus have risen significantly. According to the Central Bank of Cyprus, in 2024, the prices of apartments went up by 13.9 percent and houses by 4.7 percent.

Rental Yield

Rental yields in Cyprus will depend on various factors, such as the location, the average monthly rental price and the price per square meter for properties on sale. For example, the average cost per square meter for properties in the city center of Larnaca is around €1,975, while the average in Nicosia is about €2,400. This would translate into a rental yield of about 7.6 percent in Larnaca, while you can expect to get a return of only 4.9 percent in Nicosia.

Property Ownership Taxes and Costs in Cyprus

• Rental income tax: Rental income in Cyprus exceeding €19,500 is taxed at progressive rates. Standard deductions for income-generating expenses are deductible from the gross rental income. The tax rates are as follows:
  • €0 to €19,500 ($21,122): zero percent
  • €19,501 to €28,000 ($30,330): 20 percent
  • €28,001 to €36,300 ($39,320): 25 percent
  • €36,301 to €60,000 ($65,000): 30 percent
  • €60,000+: 35 percent
• Capital gains tax: Capital gains realized from the sale of immovable property in Cyprus are taxed at 20 percent, with a lifetime capital gains exemption of €85,430 ($92,540) if the property was owner-occupied for at least five years.
• Inheritance tax: There are no inheritance taxes or estate duties in Cyprus.
• Worldwide income tax: Cypriot residents are taxed on their global income at progressive rates from zero to 35 percent. However, residents are entitled to a worldwide income tax credit for foreign taxes paid up to the amount of Cyprus tax payable on the same income, regardless of whether a double tax treaty exists.

Maintenance fees

Local property tax

There are no annual property taxes in Cyprus; however, there are annual payments to the treasury of the municipality. The tax rate and the time frame in which the tax must be paid are set independently by each municipality. The tax rate generally ranges from one to two percent of the market value.

Garbage collection

The fee for regular garbage collection depends on local rates and the size of the property, but fees typically range from €85 ($92.07) to €500 ($541.61) per year.

Sewerage tax

Property owners in Cyprus are obligated to pay an annual sewerage tax, calculated based on the property’s market value. As a general rule, the current rate of tax amounts to about €100 ($108.32) to €200 ($216.64) per year.

Property management services

Looking at advertised rates from a number of prominent Cypriot real estate agents and property management companies, you can expect to pay around ten percent of the average monthly rental fee for a long-term rental and approximately 25 percent of the rental price for short-term rentals.

Cyprus Real Estate Buying Guide

Stamp duty

The first tax a prospective owner of Cypriot property will have to pay is stamp duty. It must be paid within 30 days after signing the sales contract, after which you can transfer the contract to the Land Committee. Property registration must occur no later than two months after the conclusion of the sales contract. 0.15 percent tax is charged on the first €170,860 ($185,078) of the immovable property and 0.2 percent on the amount that exceeds €170,860.

Property transfer fee

The property transfer fee is a fee for the renewal of ownership of real estate. Hence, property transfer fees are not applicable when buying a new build property. The buyer is exempt from paying the title fee in the primary real estate market.

If you buy property in Cyprus on the secondary market, title fee calculations are as follows:

1. For the first €85,000 ($92,000), three percent is payable
2. From €85,000 ($ to €170,000 ($184,000), five percent is payable
3. From €170,000 and upwards, eight percent is payable

However, Cypriot authorities have provided ways to reduce property transfer fees. The fee can be reduced if property ownership is divided among two or more persons. In this instance, the taxable amount attributable to each owner is proportionally reduced, lowering the liable transfer fee.

Value Added Tax

The first time you buy property in Cyprus with an area of up to 200 m2, if it’s used as a personal residence, Value Added Tax (VAT) in Cyprus is five percent; for all other real estate purchases, the rate is 19 percent (land plots can also be subject to VAT). The purchase of secondary real estate is not subject to VAT in Cyprus.

At the same time, the real estate buyer can be eligible to claim back the five percent VAT paid after ten years of ownership. The investor pays VAT at the standard rate of 19 percent, then submits an application for a tax refund to the relevant state department. After the tax authority confirms the legality of granting a refund to the investor, VAT is recalculated at a preferential rate of five percent.

Important note: If you have paid the reduced VAT rate of five percent, you cannot use the property for any investment purposes (i.e., to rent it out).

Landlord and Tenant Laws in Cyprus

Foreign buyers considering real estate investment in Cyprus should be aware that Cyprus generally has pro-tenant real estate laws.

Rent control: The rental market in Cyprus can be divided into two broad categories: Houses controlled by the Rent Control Law (1983) and the free market.

Foreign investors are not covered by the provisions of the Rent Control Law and Fair Housing Act, except a non-citizen wife of a citizen of the Republic, and legal entities controlled by Cypriot national non-residents.

Tenant eviction: Eviction of tenants in Cyprus is relatively difficult, especially in the case of ‘statutory tenants’ protected by the Cyprus Rent Control Law. On average, it takes around 360 days to evict a tenant.

Note: All information deemed reliable but not guaranteed.

How to get Cyprus Golden Visa

One of the main ways to live in Cyprus is through the Cyprus Golden Visa and enjoy the many benefits of living in Cyprus, such as the cheap cost of living, and the Equal Opportunity Act, which promotes equality for all demographics and combats discrimination.

In exchange for a property purchase of €300,000 (excluding VAT), eligible applicants can gain permanent residency rights in Cyprus for themselves and their family members and set themselves on a route for European citizenship. You can also invest in the share capital of a Cyprus company or Cyprus Investment Fund association.

The Golden Visa is available for non-EU citizens who are at least 18 years old and have sufficient funds. It’s also important to have a clean criminal record. Make sure to turn in the proper paperwork.

After seven years of residency in Cyprus, you can apply for Cyprus citizenship.

How Can Global Citizen Solutions Help You?

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Frequently Asked Questions about Returns on Cyprus Real Estate Investment

Is real estate a good investment in Cyprus?

Yes, real estate in Cyprus is a good investment.

If you purchase a property in major cities like Nicosia and Limassol, you might see significant returns.

On top of that, you qualify for the Golden Visa if you invest €300,000 in a property.

Are property prices falling in Cyprus in 2024?

The changes in prices of properties in Cyprus depend on the region where you’re buying them.

Overall property prices are on the rise, but the increase rates are slowing down. The Central Bank of Cyprus reports that house prices grew by 7.8 percent annually in Q1 2024, but prices of apartments grew by 13.9 percent.

Is there property tax in Cyprus?

There are no property taxes in Cyprus, but you still need to make annual payments to the treasury of the municipality and cover any additional expenses.