Why is Cyprus so popular with overseas buyers?
The appetite for a move to Cyprus goes from strength to strength.
Packed seminars at our latest London property exhibition, and pretty much every such event we’ve held since the pandemic, reflect the fact that Cyprus seems more popular than ever with home hunters looking to move abroad.
Whilst the fundamentals that make it a favourite have not changed – climate, lifestyle, Anglo-friendly culture and ease of access – some fiscal changes this year have made it even more attractive to buyers and movers.
Its tax benefits are tempting enough already, but the island’s 2026 Tax Reforms have improved certain things further.
Personal tax-free allowance increased
Let’s look at income tax rates first. Retirees can choose between a flat rate of 5% tax on pension income (above a tax-exempt allowance of €3,420), or they can be taxed at normal tax rates. Until this year, the personal allowance for normal income tax bands was €19,500, but now that has been increased to €22,000. This means that many retirees relying on their UK state pensions will pay practically zero tax.
Tax bands have also been raised beneficially. From €22,000 to €32,000 the tax rate of 20% applies, then it’s 25% up to €42,000, and then 30% up to €72,000. This is a considerable improvement on the former rate of 35% for income over €60,000.
Cyprus has a double taxation agreement (DTA) with the UK, so you are not taxed twice.
In Cyprus there is no inheritance tax, but beware of UK tax obligations even if you move abroad (changes to UK inheritance tax thresholds coming in 2027 are adding to Cyprus’s appeal for retirees).
Increased Capital Gains Tax exemptions
When you come to sell, Capital Gains Tax (CGT) is payable on your principal home in Cyprus. On gains from disposal of immovable property situated in Cyprus, there is a lifetime exemption of €30,000 for each person. This was increased from €17,806.
After that, capital gains tax is 20%. The gain is the difference between the sales proceeds and the original cost of the property – with the seller entitled to a further allowance regarding transfer fees paid, inflation, and the cost of any additions made to the house.
Gains from the disposal of your principal private residence are exempt up to €150,000 (increased from the former €85,430 threshold) if the owner has resided in it continuously for at least five years prior to disposal.
End of stamp duty
Stamp duty on all transactions, contracts and documents has been abolished. This will save you some money when you buy a property – around €500 to €600 on the average property, according to agents.
Do not confuse Cypriot stamp duty with property transfer tax on resale properties, which has been reduced by 50% and remains relatively low.
Special Defence Contribution reduction
In Cyprus, Special Defence Contributions (SDC) are payable for those who are Cypriot tax residents (*see below). Non-doms are exempt from paying SDC on passive income and dividends but, for standard tax residents, the rate on dividends has been reduced from 17% to 5%, while SDC on rental income has been abolished (only normal income tax rates now apply for tax residents).
Non-doms only pay a small 2.65% (GHS) contribution on dividend income to GESY, the healthcare system.
How do you become tax resident in Cyprus?
This is usually through either the 183-day rule or the 60-day rule. The 60-day route still depends on day count and ties to Cyprus, including maintaining a home there and possibly running a business there – there are statutory conditions.
Since the Tax Reforms, you can now qualify under the 60-day rule even if you are simultaneously considered a tax resident in another country. Seek professional tax advice.
Other than that: affordability is a big draw
In Cyprus, retirees can live comfortably on around €1,800 to €2,000 a month, with council tax bills often only around £50 a month for a house.
Those over 65 and resident in Cyprus are able to apply for the Cypriot General Health System (GESY), which is free, by obtaining an S1 Certificate from the NHS in the UK.
Thinking about buying in Cyprus?
From tax advantages and affordable living to sunshine and relaxed village life, Cyprus continues to attract overseas buyers and retirees.
🔍 Search for properties in Cyprus
📘 Download our Cyprus buying guide
🌍 Find out more about visas and relocating to Cyprus
