Rent from a Cyprus property is taxed as ordinary income. You knock 20% off the gross rent, add what is left to your other income and pay tax on the total at the normal 2026 bands, from 0% on the first €22,000 up to 35% above €72,000. On top of that comes a 2.65% contribution to the General Healthcare System, charged on the gross rent. The 3% Special Defence Contribution that landlords used to pay on rent was abolished from 1 January 2026.
That is the whole of it for a typical landlord with one flat. The detail below covers the deductions, how the health contribution is collected, what changes if you live abroad or own through a company, and the new rule that rent can no longer be paid in cash.
How rent is taxed under the Income Tax Law
Rental income falls under the Income Tax Law, 118(I)/2002, and is added to your salary, pension or business profit for the year. There is no separate rental tax rate. The bands for 2026 are:
| Taxable income | Rate |
|---|---|
| Up to €22,000 | 0% |
| €22,001 to €32,000 | 20% |
| €32,001 to €42,000 | 25% |
| €42,001 to €72,000 | 30% |
| Over €72,000 | 35% |
The tax-free band rose from €19,500 to €22,000 under the 2026 reform, so a landlord whose only income is a modest rent may owe no income tax at all. Our guide to Cyprus tax rates for 2026 covers the rest of the reform.
Because the rent sits on top of your other income, it is taxed at your highest marginal rate. A retiree with a small pension and an employee on €50,000 can let identical flats for identical rent and pay very different amounts.
The deductions you can claim
Three things come off the rent before income tax is worked out.
The first is a flat 20% deduction on gross rent from buildings. You do not need receipts. It stands in for repairs and maintenance, so you take the 20% rather than listing what you actually spent fixing the boiler. It does not apply to rent from bare land.
The second is interest on a loan used to buy the property you are letting. If your mortgage funded the flat, the interest is deductible against the rent that flat produces. Capital repayments are not.
The third is a wear-and-tear allowance on the cost of the building itself, excluding the value of the land underneath. The rate depends on how the building is classified, so have your accountant confirm the figure and keep the purchase documents that show how the price splits between land and building.
None of these reduce the healthcare contribution, which is charged on the gross figure.
The GeSY contribution on rent
The General Healthcare System Law, 89(I)/2001 charges 2.65% on rental income. The base is the gross rent, before the 20% deduction or any interest. Contributions stop once your total income from all sources reaches €180,000 for the year.
How it is paid depends on who your tenant is. Where the tenant is an individual, you self-assess and pay twice a year, by 30 June for January to June and by 31 December for July to December, through the Tax Department's online portal. Where the tenant is a company, a partnership, the government or a local authority, the tenant withholds the contribution from the rent and pays it over, and you receive the net amount. Check the withholding has actually been made, because any shortfall is yours to settle.
Non-domiciled residents are exempt from the Special Defence Contribution, and some arrive assuming that extends to GeSY. It does not: a non-dom landlord pays the 2.65% like everyone else.
What the 2026 reform changed
Until the end of 2025, domiciled landlords paid Special Defence Contribution at 3% on 75% of the gross rent, an effective 2.25%, under the Special Contribution for the Defence of the Republic Law, 117(I)/2002. The reform removed rent from that charge for income received from 1 January 2026, for individuals and companies alike.
On €12,000 a year of rent, that is €270 a year a domiciled landlord no longer pays. Non-domiciled residents were already outside SDC, which is why the change mostly benefits Cypriot owners rather than expats. Our guide to tax residency and non-dom status explains where that line falls, though for rent it no longer makes any difference.
A worked example
Take a landlord, tax resident in Cyprus, with €25,000 of other taxable income and a Larnaca flat let to an individual tenant for €1,000 a month, with no mortgage.
- 1Gross rent for the year: €12,000.
- 2GeSY at 2.65% of gross: €318, paid in two half-yearly amounts.
- 3Taxable rent after the 20% deduction: €9,600.
- 4Total taxable income: €34,600.
- 5Income tax on €34,600 is €2,650. Without the flat it would be €600 on €25,000. The rent therefore adds €2,050.
The flat costs €2,368 in tax and health contribution, a little under 20% of the rent, before any wear-and-tear allowance. Run your own figures through our rental yield calculator to see what that does to the return.
Landlords who live outside Cyprus
If you live in the UK and let out a flat in Paphos, the rent is Cyprus-source income and Cyprus taxes it on the same bands, with the same 20% deduction. You report it on a Cyprus personal tax return. Under the UK–Cyprus double tax treaty the country where the property sits has the right to tax the rent, and HMRC then gives credit for the Cyprus tax against the UK tax on the same income, so you pay roughly the higher of the two rather than both in full.
Whether a non-resident individual also owes GeSY on Cyprus rent is a point on which Cyprus tax advisers disagree, and we have not found an official statement that settles it. If you are in that position, get a written answer from your accountant before the first payment date.
Owning through a company
A company that owns let property pays corporation tax at 15% on its net rental profit, can deduct its actual expenses, and pays no GeSY on that profit. Profit paid out to shareholders as dividends is taxed again in their hands. Whether a company is worth the running costs for one or two flats is a sum worth doing before you buy, not after.
Rent must now be paid electronically
From 1 July 2026, article 48A of the Assessment and Collection of Taxes Law, 4/1978 requires all rent for immovable property in Cyprus to be paid by bank transfer, card or another recognised electronic method. An earlier version reported in 2025 would have applied only above €500 a month, but the Tax Department's June 2026 announcement confirmed the rule covers every rent, whatever the amount. Landlords may not accept cash.
In practice, this gives the Tax Department a bank record of every tenancy. If you have been collecting cash and not declaring it, that gap is now much easier to spot.
Paying and filing
Individuals with rental income pay provisional tax during the year: an estimate of the year's tax, in two equal instalments due by 31 July and 31 December. For 2026 that means 31 July 2026 and 31 December 2026. The rent is then declared on your annual personal return (form TD1), with any balance settled once the return is filed.
The return deadline has moved under the reform and has been extended by decree more than once, so check the current date on the Tax Department's website rather than relying on last year's. Short-term holiday lets come with licensing rules of their own, covered in our guide to Airbnb rules in Cyprus.
Letting property in Cyprus and want the numbers checked? Browse tax and wealth lawyers or search the lawyer directory for an advocate who can confirm your position on GeSY, deductions and the UK treaty. This guide reflects the rules in force in October 2026 and is general information, not tax advice.