How Cyprus Taxes Long-Term Rental Income
Rental income from long-term residential and commercial lets in Cyprus is treated as ordinary income and pooled with all other Cyprus-source income for personal income tax purposes. Before the tax bands apply, you receive a statutory 20 per cent deemed wear-and-tear deduction on gross rent — no receipts required. Only 80 per cent of your gross rental receipts form the taxable base. From 1 January 2026, the progressive income tax bands are: 0 per cent on taxable income up to €22,000; 20 per cent on €22,001–€32,000; 25 per cent on €32,001–€42,000; 30 per cent on €42,001–€72,000; and 35 per cent on income above €72,000. These bands apply to your total taxable income — rental, employment, self-employment and other — not to rental income in isolation. As a worked example: a landlord whose sole income is €30,000 gross annual rent has a taxable base of €24,000 (80 per cent of €30,000). The first €22,000 is taxed at 0 per cent; the remaining €2,000 at 20 per cent, giving a tax liability of €400 — an effective rate of roughly 1.3 per cent on gross rent. This guide focuses on long-term letting. Short-term holiday rentals and Airbnb-style letting are treated differently — see the airbnb-short-term-rental-cyprus guide for those rules. To model your net rental yield after all taxes, use the rental-yield calculator at /tools/rental-yield-calculator.
The 2026 SDC Abolition: What You Save
The most significant change for Cyprus landlords in 2026 is the abolition of the Special Defence Contribution (SDC) on rental income, effective 1 January 2026. Under the previous regime, Cyprus-domiciled tax residents paid SDC at 3 per cent on 75 per cent of gross rent — an effective rate of 2.25 per cent of gross rent — on top of their normal income tax. This created a dual-layer tax on every euro of rental income. From 2026, SDC on rental income is gone for all individual landlords. Non-domiciled Cyprus tax residents (non-doms) were already exempt from SDC before 2026, as were non-resident landlords. The abolition primarily benefits domiciled residents, but it also eliminates the compliance burden of tracking SDC separately for everyone. To illustrate the saving: on €30,000 gross annual rent, a domiciled resident would previously have owed approximately €675 in SDC (2.25 per cent × €30,000) each year, in addition to income tax. That saving is now permanent from 2026 onwards. The abolition is part of the broader 2025–2026 Cyprus tax reform package, which also revised the personal income tax bands and introduced the cashless-rent obligation described below. Rental income is now taxed solely through personal income tax for individuals. For a broader picture of the reform — including changes to dividend SDC — see the taxes-for-expats guide and the non-dom-status-guide.
GHS Healthcare Contribution: Still Applies in 2026
Abolishing SDC does not mean rental income escapes all charges beyond income tax. The General Healthcare System contribution (GHS, also known as GeSY) continues to apply at 2.65 per cent on gross rental income for individual Cyprus tax-resident landlords. Unlike the 20 per cent wear-and-tear deduction, the GHS contribution is calculated on the full gross rent before any deductions. The annual income cap for GHS across all sources is €180,000, meaning the maximum annual GHS liability on rental income alone is approximately €4,770. Income above this cap attracts no further GHS charge. The payment mechanism depends on your tenant. Where your tenant is an individual, you self-assess and pay GHS directly to the Tax Department in two instalments: by 30 June for income received in the first half of the year, and by 31 December for the second half. Where your tenant is a company or partnership, that business is required to withhold GHS at 2.65 per cent at source and remit it to the Tax Department on your behalf — check your rental statements to confirm this is happening correctly. Companies that own rental property are not themselves subject to GHS on that income — the contribution applies only to individual landlords. The position for non-resident landlords on GHS is not uniformly settled across published sources. If you are a non-resident landlord, obtain specific written advice from a Cyprus-registered accountant or tax adviser before filing.
Non-Resident Landlords: Your Cyprus Tax Position
If you own property in Cyprus but do not qualify as a Cyprus tax resident — broadly, spending fewer than 60 days in Cyprus per tax year under the 60-day rule, or fewer than 183 days under the standard rule — you remain liable to Cyprus income tax on rental income from that property. Cyprus exercises source-based taxation on immovable property: non-residents pay tax on Cyprus-source income only, and rent from a Cyprus property is firmly within that scope. Non-resident landlords benefit from the same reliefs as residents: the €22,000 nil-rate income tax band, the 20 per cent statutory wear-and-tear deduction, and full exemption from SDC (non-residents were exempt even before the 2026 abolition). Non-residents should register with the Cyprus Tax Department, obtain a tax identification code (TIC), and file an annual TD1 income tax return via TAXISnet. Where your tenant is a company or partnership, the tenant must withhold 10 per cent of each rent payment at source as a prepayment against your income tax liability. This credit is offset against your final liability when you file your annual return — you pay the shortfall if more is due, or claim a refund if withholding exceeded your liability. Cyprus has a wide network of double taxation treaties. Your country of tax residence may also have taxing rights over the same income, so review the applicable treaty to avoid double taxation, and keep a current tax residency certificate from your home jurisdiction on file. For property-transfer and capital gains considerations, see the property-taxes-2026 guide.
The Cashless-Rent Rule: Electronic Payments from 1 July 2026
From 1 July 2026, all rent payments relating to Cyprus immovable property must be made by traceable electronic means. This obligation applies regardless of the rent amount and regardless of property type — residential, commercial, or other. Permitted methods include bank transfers, debit or credit card payments, and other recognised electronic payment systems. Note that early market commentary referenced a €500 threshold below which cash was said to remain permissible; the Cyprus Tax Department confirmed in mid-2026 that no such threshold applies — the rule covers all rent from 1 July 2026. As landlord, you are prohibited from accepting cash rent after the effective date. A handwritten receipt acknowledging a cash payment does not bring it into compliance. The main tax consequence falls on the tenant: rent paid by non-compliant means may be disallowed as a deductible expense in the tenant's tax return, effectively increasing their taxable profit. Commercial tenants therefore have a strong independent incentive to insist on electronic payment. For individual tenants, non-compliant payments may also affect any rental-expense deduction they may be entitled to. For landlords, electronic payment makes record-keeping more straightforward: bank statements and card-payment records provide a dated, verifiable audit trail of all receipts. Update your tenancy agreements before or at renewal to specify the approved electronic payment method, and retain payment records, agreements, and related documents for at least six years to meet Cyprus tax-record retention obligations.
Filing, Allowable Deductions and Year-Round Compliance
Individual Cyprus income tax returns (form TD1, submitted online via TAXISnet) covering the prior tax year are due by 31 October for electronic filers, though the Tax Department has extended this deadline in recent years — always confirm the current date. If you expect taxable income in the current year, provisional tax instalments — each equal to half the estimated annual liability — are payable by 31 July and 31 December. GHS self-assessment payments are due separately, by 30 June and 31 December. For the step-by-step filing process, see the cyprus-tax-return-filing guide. Beyond the automatic 20 per cent wear-and-tear deduction, individual landlords may deduct: loan interest on borrowings used to acquire, construct, or improve the rented property; maintenance and repair costs supported by VAT invoices or official receipts (note that capital improvements are not deductible as repairs); insurance premiums directly attributable to the rental property; and professional property management fees. Keep all rental agreements, bank statements, invoices, and receipts for a minimum of six years. For a full picture of your investment economics after all taxes and costs, use the rental-yield calculator at /tools/rental-yield-calculator, and to weigh a purchase against renting, see the buying-vs-renting-cyprus guide. For a complete view of Cyprus property ownership costs beyond income tax, see the property-taxes-2026 guide.