A buyer of an apartment in Cyprus pays taxes at three stages: on purchase, while holding and letting the property, and on sale. An Israeli resident also reports and pays tax in Israel, as explained in Israeli tax on property abroad.
On purchase
- VAT: 19% on a new property bought from a developer. The reduced 5% rate is for a main residence subject to size and price conditions, not for an investment apartment.
- Transfer fees: on a property not subject to VAT, such as a resale, graduated fees of 3%, 5% and 8% apply according to value, with a permanent 50% reduction.
- Stamp duty: abolished from 1 January 2026.
While letting
- Cyprus income tax on the rent, at progressive rates, with a 20% deduction from gross rent and expenses such as interest and maintenance.
- GHS, the national health contribution of 2.65% of the rent, which also applies to non-residents of Cyprus.
- Local authority charges, which vary by municipality.
On sale
Gains on the sale of property in Cyprus are subject to 20% capital gains tax. The gain is calculated after adjustment for inflation and deduction of allowable expenses, and there are limited lifetime personal exemptions.
No tax treaty between Israel and Cyprus
Israel and Cyprus have no double tax treaty. Cyprus taxes as the country where the property is located, and Israel taxes its resident and usually grants a credit for the tax paid in Cyprus. That is why the choice of tax track in Israel has a large effect on the bottom line.
What to do in practice
Before buying, ask the local lawyer and a tax adviser for a calculation of all costs, including VAT and fees, and decide whether to buy as an individual, in partnership or through a company. Each structure has tax consequences in both countries.
Where do you go from here?
At Paz Israel & Co. Law Office we accompany real estate investors in Israel, Israelis buying property in Cyprus and foreign investors buying in Israel: checking the property and the seller, negotiating the contract, accompanying you through registration and coordinating with tax advisers. In Cypriot transactions we work in coordination with a local Cypriot advocate. For more information see our real estate investor services page, or contact us to schedule a meeting in Tel Aviv, Jerusalem or Modi’in.
This article provides general information, is correct as of the time of writing, and does not constitute legal or tax advice. Cypriot law is checked in every transaction with a local advocate.