Property Investment in Cyprus in 2027: Net Yield, Taxes and Risks

Short answer: what a Cyprus property returns as an investment

A new one-bedroom flat costs, at the median of our database, €287,000 in Paphos and €319,000 in Limassol (asking prices excluding VAT, as of 28 October 2026). With the rents Numbeo reports for the city centre in September 2026 (€980 and €1,480 a month) that is a gross yield of 4.1% and 5.6% on the price excluding VAT. After 19% VAT, purchase costs, one month of vacancy, community charges, management and the GESY contribution, the net yield is 2.3% and 3.3% of the total outlay, if the owner has no other income in Cyprus. Both rents are averages of listings and user entries. No income or price gain is promised by these figures, and the yields of 7% and more that some sellers advertise are not reached by this calculation.

The prices come from the new-build offers in our database, the rents from Numbeo, the tax rules from the Cypriot Income Tax Law 118(I)/2002 and the rules for buyers from the law Cap. 109 and the authorities' pages. Every assumption stands next to the number it moves, and the sources are at the end. The article deals with the Republic of Cyprus. The north of the island is not under the control of the Republic and is not part of the calculation; the difference is explained in Cyprus and Northern Cyprus.

What a flat as an investment in Cyprus costs: prices by city and bedrooms

Our database contains new-build projects only. The table shows the median asking price excluding VAT and, in brackets, the median floor area. Paphos includes the surrounding area. The city comparison for buyers is in Paphos vs Limassol and the Larnaca districts in the Larnaca property guide.

The asking price is not the sum you pay. Whoever buys to let pays 19% VAT on the new-build price. The 5% rate applies only to the buyer's main residence, and the tax authority claims the difference back if the home is let within 10 years (Cyprus property VAT explained). When buying from a developer with VAT, no transfer fee is charged, and stamp duty no longer applies to contracts signed from 1 January 2026. For lawyer and other costs we use about €4,000 (the cost of buying property in Cyprus).

Rental yield in Cyprus: a worked example for Paphos and Limassol

The example takes a new one-bedroom flat at the median price, let long term. The assumptions:

• Property. Paphos €287,000 (55 m²), Limassol €319,000 (56 m²), each excluding VAT, from the database of 28 October 2026.
• Purchase. Cash purchase without a loan, 19% VAT, €4,000 for lawyer and other costs (assumption from our cost breakdown).
• Rent. Numbeo, average for a one-bedroom flat in the centre, September 2026, as used in our cost of living guide: €980 in Paphos and €1,480 in Limassol. Numbeo rests on user entries and listings; concluded leases are not in it.
• Vacancy. One month a year (assumption), so the rent is received for 11 months.
• Property costs. €1,560 a year: community charge €75 a month, waste, sewerage, municipal tax and insurance. This is the assumption of the example in annual property tax and owners' costs, taken over unchanged.
• Management. 10% of the rent received, the middle of the 8–12% range in managing a Cyprus property from abroad.
• Tax. A flat 20% deduction from the rent, then the 2026 tariff (0% up to €22,000, 20% up to €32,000, 25% up to €42,000, 30% up to €72,000, 35% above). The owner has no other income in Cyprus. We assume no depreciation and no interest.
• GESY. 2.65% on the rent received.

Two items explain the gap between 4.1% and 2.3% in Paphos. The larger arises before the first rent: VAT and purchase costs raise the outlay by €58,530, or 20.4%, above the asking price. The second is the running costs, which absorb €2,924 of the €10,780 rent received (property costs, management, GESY). Income tax plays no role in this case, because the taxable amount lies below the allowance of €22,000.

What changes if the assumptions differ

• Owner with other income in Cyprus. With €40,000 of other Cypriot income, the taxable rent is added to it. Paphos: tax on €48,624 equals €4,500 plus 30% × €6,624, so €6,487; on €40,000 alone it is €4,000; the rent costs €2,487 in tax, and the net yield falls to 1.55%. Limassol: tax on €53,024 equals €4,500 plus 30% × €11,024, so €7,807, less €4,000 gives €3,807; the net yield falls to 2.31%.
• Higher rent. On 28 October 2026 Numbeo shows €1,131 for Paphos (range €850 to €1,500) and €1,488 for Limassol (range €1,050 to €2,000). With €1,131 the net yield in Paphos rises to 2.69%; in Limassol almost nothing changes. The Paphos value thus moved by about 15% in a month. Each €100 of monthly rent shifts the net yield by 0.25 to 0.28 percentage points.
• Loan. The Central Bank of Cyprus reports an average rate of 4.16% on new housing loans in August 2026. It is above the net yield in both cases, so the financing does not pay for itself from the rent. Terms and process are in mortgages for foreign buyers in Cyprus.
• Resale flat. Without VAT and with a transfer fee (€8,600 on €300,000), the entry outlay is lower. Our comparison Cyprus vs Malta works through a €300,000 resale flat without management up to a net yield of 3.76%.

As a cross-check, Global Property Guide gives a gross yield of 4.88% for the whole island in the first quarter of 2026, formed from asking prices. The value lies between our 4.1% and 5.6%. For Larnaca we found no rent source that we could check and therefore do not work through an example.

Short-term or long-term letting in Cyprus: what changes in the calculation

The table above calculates long-term letting: one tenant, one contract, no registration in the tourist register. With short-term letting through Airbnb or Booking.com, income per night rises, and so do duties and costs. Every property let to tourists for fewer than 90 consecutive days must be entered in the register of tourist accommodation (Law 9(I)/2020). Without registration a fine of up to €5,000 and/or up to one year in prison threatens, the registration number belongs in every listing, and guests must be reported within 24 hours through the Xenia system. Cleaning, platform fees, VAT above the turnover threshold and management on site come on top. The details are in short-term rental rules in Cyprus.

We quote no yield for short-term letting. No official statistic combines occupancy, price per night and platform fees, and sellers' figures are gross values before management. To calculate, set occupancy and nightly price for the specific flat and deduct the items of the table above in addition to cleaning and platform fees.

Tax on rental income in Cyprus for owners from abroad

In Cyprus. Rent from a property in Cyprus is taxable there even if the owner does not live in Cyprus: the Income Tax Law 118(I)/2002 covers rents for persons not resident in the Republic in Article 5(2). Article 9(2) deducts a flat 20% from the gross rent of a building before depreciation and interest. The tariff in the Second Schedule applies to the rest, 0% up to €22,000 from 2026, and the text of the law does not distinguish by residence. The special defence contribution on rental income was abolished on 1 January 2026. The GESY contribution of 2.65% falls on the rent (GESY explained). How the Tax Department applies this contribution to owners who do not live in Cyprus is not clear from the published sources; we included it in the calculation. Clarify it with the Tax Department before the first letting.

In your home country. The double tax treaties allow Cyprus to tax the rent (Article 6). In the Cyprus–UK convention of 22 March 2018, Article 6(1) says so, and Article 22(1)(a) allows the Cyprus tax as a credit against UK tax computed on the same income; the UK computes the income under its own rules, and the Cypriot 20% deduction does not apply there. Germany credits the tax paid in Cyprus. Austria and Switzerland exempt the rent from their own tax and take it into account only for the rate on the remaining income. For other home countries, including Israel and the UAE, we found no verified treaty text and make no statement. In the example above, an owner with no other income in Cyprus pays no income tax there; a resident of Germany then pays the tax on the rental income in Germany, and an Austrian or Swiss resident feels the rent through the higher rate on other income. How residence and treaties interact is covered in tax residency in Cyprus, and the other taxes of ownership in taxes on real estate in Cyprus.

Buying property in Cyprus as a foreigner: permit and residence

Permit. The law on the acquisition of immovable property by aliens (Cap. 109) excludes citizens of the EU and the EEA from the permit requirement. Buyers from EU countries therefore buy without the approval of the Council of Ministers. Swiss, British, Israeli and other non-EU buyers are not exempt. For them, without a permit the sale contract gives no right to the property, and a registration at the Land Registry without a permit is void (Article 3). The Ministry of Interior describes the procedure like this: an application on form COMM 145 to the District Administration, no fee, two to three weeks. For British buyers there is a separate guide: buying property in Cyprus from the UK after Brexit.

Quantity limit. According to the Ministry of Interior, the permit of a buyer from a third country covers either a plot of up to 4,000 m² for an own home or up to two units: two flats or houses, a flat and a shop up to 100 m², or a flat and an office up to 250 m². Anyone planning several flats as a portfolio clarifies with the lawyer, before the second sale contract, whether another permit is needed.

Residence. Guides often say that a new-build from €300,000 leads to permanent residence. That route (Category 6.2) is for buyers from third countries and requires, besides the property, income from abroad of €50,000 a year; the conditions are in how to get permanent residence in Cyprus. Citizens of the EU, the EEA and Switzerland are grouped by the Migration Department in the group "Union". They may stay up to three months without formalities, need work or sufficient means with comprehensive health insurance in Cyprus after that, and register within four months of arrival with form MEU1 (fee €20). For them residence does not depend on the property purchase. Remote buying with a power of attorney is described in buying property in Cyprus remotely.

Risks of a Cyprus property investment and the legal safeguards

• Rent and vacancy. Numbeo rents are averages of listings and user entries. The Paphos value was €980 in September and €1,131 on 28 October. Whoever calculates the yield with the higher number carries the risk that the lease yields less. Plan with the lower half of the range and with months without a tenant.
• Resale. In the first half of 2026, according to Landbank Analytics, 3,594 properties were sold in first sales and 3,202 on the resale market. The median of resale flat transactions was €120,000 in Paphos and €217,000 in Limassol. The figures are not a like-for-like comparison with new-build asking prices, but they show the order of magnitude of the gap. Whoever buys with 19% VAT must realise more than 20% above the price excluding VAT on sale to get the total outlay back (selling costs and tax not included).
• Delivery of the new-build. When buying off plan you pay for a flat that does not yet exist. Cyprus does not prescribe a performance guarantee. The most important statutory protection arises when the sale contract is deposited at the Department of Lands and Surveys: then Law 81(I)/2011 applies, which protects the buyer if the seller does not fulfil the obligations. Since 12 December 2023 (Law 132(I)/2023), if the property carries only a deposited mortgage or another deposited contract, the buyer may pay the price into the seller's bank account and have the property registered in the buyer's name, regardless of encumbrances that rank after the contract. The seller must also attach to the contract a search certificate on encumbrances that is at most five working days old. Your lawyer handles the deposit; have it confirmed in writing. A bank guarantee and an escrow account are not prescribed and can be agreed in the contract. The clauses are described in how to protect an off-plan deposit in Cyprus, the developer check in how to vet a Cyprus developer and the handover in snagging a new-build in Cyprus.
• Contracts with fixed rent. Some projects offer contracts in which a developer or operator promises a specific payment. That is a payment promise of the counterparty. It applies for the agreed term and is as reliable as the counterparty's creditworthiness; what follows afterwards is set by the contract. How these models are built is described in guaranteed rental income in Cyprus property.
• Currency. Purchase, rent and costs run in euro. Anyone who thinks in pounds, Swiss francs or dollars, or holds capital in those currencies, carries the exchange-rate risk against the euro.
• Market development. An index that rose last year says nothing about the next. We give no forecast; the market data are put in context in the Cyprus real estate market forecast.

Claims about Cyprus investment returns and what the numbers show

Guides often quote rental yields of 6 to 9% for Paphos and Limassol and promise gains of 20 to 30% on off-plan purchases. We did not find an official source for either. The calculation above, with database prices and Numbeo rents, gives 4.1% and 5.6% gross and 2.3% and 3.3% net, and Global Property Guide reports 4.88% gross for the island in the first quarter of 2026. The second frequent claim is that investors can buy at 5% VAT. The 5% rate is for the buyer's own main residence; investors pay 19%, and the 5% is clawed back if the flat is let within 10 years. The third is that buying leads to permanent residence for everyone: the €300,000 route is for buyers from third countries, and EU, EEA and Swiss citizens do not need it.

Price growth and selling in Cyprus: what the data show and what the sale costs

According to the Central Bank of Cyprus, the property price index rose in the second quarter of 2026 by 8.5% on the previous year, flats by 8.9%. By district it was 9.8% in Larnaca, 9.6% in Paphos and 7.8% in Limassol. The residential property price index of the Cyprus Statistical Service by the Eurostat method shows 7.9%, for the whole European Union 4.7%. From January to September 2026, according to the Land Registry, 14,969 sale contracts were concluded, about 14% more than the year before, and foreigners bought 41.9% of the properties. The Land Registry does not publish a split by nationality, so how many of these buyers come from the UK, the EU or elsewhere is unknown. These figures describe the past and mix new-builds with existing stock.

On sale Cyprus charges 20% capital gains tax on the gain. Deducted are the acquisition cost (for a new-build including the VAT), purchase costs, improvements and agent commission. On top comes a one-off allowance per person, which for contracts from 1 January 2026 is €30,000 for other property and €150,000 for your own main residence after at least five years (selling property in Cyprus). A numerical example for Paphos with an assumed sale price of €400,000 (an assumption and no forecast): gain €400,000 − €345,530 = €54,470, less the allowance of €30,000 leaves €24,470, tax at 20% is €4,894. Selling costs and an adjustment for inflation are not included; the tax would be lower accordingly.

As a rule of thumb: five years of net income as in the example (5 × €7,856 = €39,280) cover two thirds of the €58,530 that VAT and purchase costs amount to in Paphos. That presupposes an unchanged rent and full occupancy and is no promise of income. Which flats fit your budget is shown on the pages for off-plan properties in Cyprus, property in Limassol, in Paphos and in Larnaca.

Frequently asked questions about property investment in Cyprus

Sources (status 29 October 2026). Database of this website (new-build offers, medians of 28 October 2026); Numbeo (numbeo.com, Paphos and Limassol, September 2026 as used in our cost of living article, cross-check on 28 October 2026); Income Tax Law 118(I)/2002 (cylaw.org, Articles 5, 9 and Second Schedule); law on the acquisition of immovable property by aliens, Cap. 109 (cylaw.org, Articles 2 and 3); Ministry of Interior (gov.cy/moi, Purchasing Property) and Migration Department (gov.cy/mip-md, MEU1); Department of Lands and Surveys (dls.moi.gov.cy: contract of sale, Laws 81(I)/2011 and 132(I)/2023); Central Bank of Cyprus (property price index Q2 2026, housing loan rate August 2026); Landbank Analytics (transaction prices H1 2026); Land Registry (sale contracts January to September 2026); PwC Worldwide Tax Summaries and EY (taxes 2026, special defence contribution, GESY); Global Property Guide (globalpropertyguide.com, gross yield Q1 2026); Convention between the UK and Cyprus of 22 March 2018 (legislation.gov.uk, Articles 6, 13, 22); Germany–Cyprus, Austria–Cyprus and Switzerland–Cyprus treaties as read for our guide on selling property.

Would you like to follow the calculation with your own budget and a specific flat? Send us the city, the budget and your plan for letting, and we will send you matching new-build properties with prices. The current offer is on the page off-plan properties in Cyprus, and a conversation starts at contact us.