Cyprus plans tax incentives for landlords

Cyprus has unveiled two bills aimed at offering incentives for landlords who offer affordable housing by providing substantial tax benefits through the Interior Ministry’s “Renovate-Rent” programme.

The proposed legislation, presented to parliament on Thursday, offers a three-year exemption on income tax, corporate tax, and defence contributions for rental income from properties leased at affordable rates. Additionally, landlords can benefit from enhanced capital allowances of up to 20%.

Affordable rent under this scheme is defined as at least 30% below prevailing market rates. The Interior Ministry plans to publish detailed market rate lists on its website and affordable housing platform, categorized by district, municipality, and property type.

The new measures also increase capital allowance rates, raising allowances for buildings from 3% to 5% and for machinery and equipment from 10% to 15%. These benefits are available for purchases made between 2024 and 2027, and apply to both individual landlords and companies.

Tax exemption costs

The tax exemptions are estimated to cost the government €1.75 million annually, amounting to €5.25 million over three years. Separately, a proposed amendment to the Special Defence Contribution Law will remove the 3% defence levy on rental income for properties leased under the scheme, an initiative expected to cost €100,000 per year, or €300,000 in total.

Qualifying tenants

To qualify for the programme, tenants must meet specific income requirements and cannot be related to the landlord. The gross annual family income limits are set as follows:

• €25,000 for single individuals.
• €45,000 for couples or single-parent families with two members.
• €50,000 for three-person families.
• €55,000 for four-person families.
• €65,000 for families of five or more.

These measures aim to boost the availability of affordable housing while offering financial incentives to landlords.