Your details
Result 2026
Net rental income
€ 0
Total tax burden
€ 0
Effective tax rate
0%
| Gross rental income | € 0 |
| Less: 20% wear and tear deduction | – € 0 |
| Off: mortgage interest | – € 0 |
| Taxable rental income | € 0 |
| Income Tax (IB) | € 0 |
| GeSY contribution (2.65%) | € 0 |
| SDC rent | € 0 |
How is rental income taxed in Cyprus in 2026
The biggest change in 2026: the Special Defence Contribution (SDC) on rental income has been abolished. This means the end of the well-known “3% on 75%” formula that was levied on top of income tax for years.
As of January 1, 2026, as a private landlord, you will pay two levies on rental income:
- Income tax: progressive, after deduction of 80% of the gross rent
- GeSY (National Healthcare Contribution): 2.65% of gross rental income, for Cyprus residents
That's it. No more SDC. Simpler, lower, and better calculated.
Deductions: how to calculate your taxable rental income
Not the entire gross rent is taxable. You may deduct the following costs:
Automatic 20% wear and tear deduction
20% of the gross rental income is automatically deducted for wear and tear and depreciation of the property, regardless of the actual costs. This means that only 80% of the gross rent applies as the taxable base.
Interest on mortgage loan
Interest paid on a loan used to finance the rented property is fully deductible from the 80% tax base.
Other deductions (not automatic, but possible):
- Maintenance and repair costs
- Insurance premiums for the property
- Management costs (property management)
The calculation then looks as follows:
| Step | Calculation |
|---|---|
| Gross rental income | €24.000 |
| Off: 20% wear | -€4.800 |
| Off: mortgage interest | -€0 |
| Taxable rental income | €19.200 |
| Income tax (tax-free up to €22,000) | €0 |
| GeSY 2.65% on €24,000 gross | €636 |
| Total tax burden | €636 |
In this example, the effective tax rate on €24,000 in rental income is less than 3% solely due to the GeSY contribution, because the taxable income remains below the €22,000 exemption.
Income Tax Brackets Cyprus 2026
Rental income is included in your total taxable income. The 2026 tax brackets are:
| Income | Rate |
|---|---|
| Up to €22,000 | 0% |
| €22.001 – €36.000 | 20% |
| €36.001 – €60.000 | 25% |
| €60.001 – €72.000 | 30% |
| Above €72,000 | 35% |
This is the combined income (salary, rental income, self-employment activities) added together. If you already receive €35,000 in salary and €20,000 in rent, your total income is €55,000, and you already pay 25% on the portion above €36,000.
GeSY: the healthcare contribution based on rental income
Cyprus residents are also required to pay a GeSY contribution (healthcare system) of 2.65% on gross rental income. The GeSY contributions are capped at €4,770 per year for the total of all income combined.
In practice: if you already pay GeSY on your salary and you are above the annual ceiling of €4,770, you do not pay any additional GeSY on your rental income. You reach that ceiling at a total income of approximately €180,000.
Non-Dom status has no influence on the GeSY obligation, which applies to all Cyprus residents.
Non-Domestic tenants and rental income: what changes?
For Non-Dom residents, the SDC on rental income was already not applicable. Historically, the SDC on rental income primarily affected Cypriot tax residents, who are also dominated. For Non-Dom investors, therefore, the practical benefit of the abolition was smaller than the headline suggests.
What Non-Doms currently pay on rental income:
- Income tax on 80% of the gross rent (progressive, 0% up to €22,000)
- GeSY 2.65% on gross rent (capped at €4,770 total)
- No SDC (was already 0%)
As a Non-Domain tenant with exclusively rental income of €24,000/year and no other income, in 2026 you effectively pay only the GeSY of €636, an effective rate of 2.6% on the gross rent.
Renting out via Cyprus Ltd: the corporate route
Companies in Cyprus pay a fixed corporate tax of 15% on their net rental profit. Companies can also deduct expenses, including mortgage interest, maintenance costs, insurance, and other approved expenses.
The route via a Cyprus Ltd is attractive if:
- You own multiple properties (economies of scale in cost structure)
- You want to reinvest rental profits without a direct payout (personal income tax deferral)
- You, as a Non-Dominion shareholder, want to receive the profit later as a dividend — tax-free
Concrete comparison based on €50,000 gross rental income, no other income:
| Scenario | Private (Non-Domain) | Via Cyprus Ltd + Non-Dom benefit |
|---|---|---|
| Taxable income | €40,000 (after 20% deduction) | €40,000 net profit (after costs) |
| Tax | ~€4,500 IB + €1,325 GeSY | €6,000 Corporate Income Tax (15%) |
| Dividend distribution | not applicable. | €0 extra (Non-Domain) |
| Effective | ~11,6% | 12% |
For smaller portfolios, private ownership is generally simpler. For larger portfolios or active landlords (Airbnb, multiple properties), the corporate route pays off due to the higher deduction possibilities.
Airbnb and short-term rentals: additional points to consider
If you run a short-term rental activity (e.g. Airbnb), you must register for VAT as soon as your turnover exceeds €15,600 per year.
Long-term rentals (more than 30 days) are exempt from VAT. VAT liability applies only to short-term rentals, such as on a platform (Airbnb, Booking.com).
In addition, a new transparency rule applies from July 1, 2026: rent payments exceeding €500 must be settled via traceable banking channels. Cash rent above €500 is no longer accepted as a deductible expense for the tenant and falls outside the official payment system.
Frequently Asked Questions
How much tax do I pay on rental income in Cyprus? It depends on your status. As a Non-Dom with only rental income under €22,000, you are taxable: only GeSY (2.65% on gross income, max €4,770/year). For higher total incomes, income tax applies to the portion above €22,000, at a rate of 20% – 35%.
Is the SDC on rental income still applicable in 2026? No. The SDC on rental income has been completely abolished as of January 2026. Rental income is now subject exclusively to income tax.
As a non-resident, do I also pay tax on rental income from Cyprus? Yes. Non-residents are liable for tax in Cyprus on income from Cypriot real estate, regardless of where they live. The progressive income tax brackets apply. The GeSY contribution applies only to Cyprus residents.
Can I deduct more than 20% of my rental income? The 20% depreciation deduction is automatic and fixed. In addition to the 20% base amount, you may fully deduct mortgage interest. Other costs (maintenance, insurance, management) are in principle deductible but require documentation.
Do I, as a landlord, always have to file a tax return? From tax year 2026, all Cyprus residents aged 25 and over are required to file an annual return, regardless of income level.
Next step
Do you own property in Cyprus or are you considering an investment? Your rental tax position depends heavily on your personal structure: private or corporate, resident or non-resident, Non-Dom or domiciled.
Schedule a free introductory meeting with Cyprus-Consult for a personal overview of your net return after tax.
