The short answer
Buying a new or off-plan home in Cyprus means paying VAT, and after the price itself it is usually your biggest cost. The standard rate is 19%. A reduced 5% rate exists, but only if you will live in the home as your main, permanent residence.
You may have read that VAT on new homes is jumping from 5% to 19%. It isn't. Both rates are the same as before. What changed on 1 September 2026 is who gets the 5% rate and what counts as a new building, and an older relief for some projects ends this year. For plenty of buyers the effect is the same anyway: a VAT bill bigger than they planned for.
Below is how the rules work today. VAT is only one piece of a purchase, so we also say where it meets the legal, banking and property side of the deal.
Who pays 5% and who pays 19%
The rate depends on how you will use the home, and on its size and price. If it will be your main residence:
- Up to 130 m² and €350,000: 5% on the whole price.
- 131 to 190 m², up to €475,000: 5% on the first 130 m², 19% on the rest.
- More than 190 m² or €475,000: 19% on the whole property, not only on the part above the limit.
- For holiday homes, rental investments and company purchases it is 19% whatever the size.
What changed on 1 September 2026
Two government decrees, published in February 2026, took effect on 1 September. They changed how the VAT Law treats homes. The 19% and 5% rates stayed the same. What moved is the definition of a new building, which now includes a test based on when the property is first used, and the Tax Department asks for more proof that the home really is your main residence.
So a sale treated one way in 2025 may be treated differently now, especially if you bought off-plan before 1 September. The dates of the contract, the payments and the handover can all count, so each purchase needs checking on its own facts.
What ends in 2026, and what may change in 2027
Before June 2023, the 5% rate covered the first 200 m² of a main home, with no price cap. A small group of older projects can still use that scheme: in April 2026 the deadline was extended to 31 December 2026. It applies if the planning application was filed by 31 October 2023 and the building permit falls within set dates, and the buyer files through the Tax Department portal.
After that date, at least one Cyprus law firm says everyone will be under the new rules only. We haven't seen the official text yet, so treat that as likely, not settled.
What nobody knows yet is whether the Tax Department and the Ministry of Finance will change the rules again next year. They may, or they may leave them alone. Nothing has been announced, and we wouldn't plan a purchase around a change either way. We are in discussion on how the rules are applied in practice, and we will update this guide when the picture is clear.
A worked example
Take a new apartment at €300,000 before VAT, with 110 m² of buildable area, bought as a main home. It is inside every limit above.
At 5%, VAT is €15,000. At 19%, because the buyer doesn't qualify, it is €57,000. That is €42,000 more for the same apartment, which is why the conditions matter. Ask the developer whether the quoted price already includes VAT.
There is also a condition that runs for years. The 5% rate assumes you will live in the home for a long time, and selling, renting it out or moving away early can lead the Tax Department to ask for the difference back.
If you are buying off-plan
Signing before 1 September 2026 doesn't automatically keep the old VAT treatment. Check the dates in your contract against the rules, and get the developer to confirm in writing which rate applies and what happens if the reduced rate is refused. A contract can't bind the Tax Department, so you should know up front who pays any extra tax.
Off-plan also depends on the developer finishing the building and delivering the title deed. That is why we look at the permits, the land and the payment schedule together with the tax position.
One team for the whole purchase
A VAT question is rarely just a VAT question. The rate depends on how you will use the home, which ties into your residency plans. How you pay depends on your Cyprus bank account and where your funds come from. The contract, permits and title deed are your lawyer's job, and choosing the property is a real estate decision.
At OCM Real Consulting we handle these together. We coordinate the legal, banking and real estate sides, so you aren't passing documents between separate advisers, or finding out about a tax condition after you have paid a deposit.