An important change is coming to Cyprus VAT legislation that affects when a property is considered “used” and therefore no longer subject to VAT. For buyers and investors, this definition directly impacts the final cost of a property and the timing of a purchase.
Under the current rules, valid until 31 August 2026, a property is classified as “used” only after specific conditions are met. This happens either after 24 months of actual use by a non-related person, or after five years from the date of completion, even if the property has not been used. Until one of these conditions is satisfied, the property is treated as new and remains subject to VAT.
From 1 September 2026, the criteria will change. A property will be considered “used” after just 18 months of use, with no requirement for the occupant to be a non-related party. In addition, the five-year rule will be removed entirely. This means that more properties will transition to resale status faster and may become exempt from VAT sooner than under the current system.
These changes are significant for both buyers and investors. A shorter timeline to “used” status means greater flexibility, potential tax savings, and new opportunities in the resale market. At the same time, it makes timing an even more important factor when considering a property purchase in Cyprus.
