Cyprus real estate: Larnaca's tourism surge, electronic rent rule, and an 11.9% jump in transactions

BINA Cyinnovation Hub's weekly roundup of the Cyprus real estate market and its regulation (30 May – 6 June 2026): Larnaca signals investor confidence with 29 new tourism developments in the pipeline and its selection as European Capital of Culture for 2030; the Tax Department reminds landlords that from 1 July rent above €500 must be paid by electronic means only; and Land Registry data points to an 11.9% rise in transactions since the start of the year. Alongside these, a regulatory and European backdrop continues to shape the market.

Saturday, 6 June: Larnaca's tourism-property surge — 29 new developments in the pipeline, and the city named European Capital of Culture 2030

At this week's tourism conference of Larnaca's Regional Tourism Board (ETAP), board chairman Dinos Lefkaritis announced that 29 new tourism units and complexes are expected to open or be registered in the city and district over the coming years — an indication of confidence among Cypriot and foreign investors. (The original Greek term, μονάδες τουριστικές, refers to accommodation units that may include hotels but also other forms of lodging, not hotels exclusively.) "Now is Larnaca's time," he said. New parks and squares are being built in the city centre, and historic buildings are being converted into cultural venues. Nakis Antoniou, chairman of the Larnaca Chamber of Commerce (EVE), pointed to investment in the seafront promenade, the upgrade of the marina and port, and new hotel projects as engines of quality, sustainable tourism. Deputy Tourism Minister Costas Koumis expressed "cautious optimism" about the second half of 2026, noting that despite pressures from geopolitical tension in the Middle East (which dented visitor numbers mainly in March–April), a gradual stabilisation has been recorded in recent weeks. Added context: Larnaca has been named European Capital of Culture for 2030 — a move expected to further accelerate urban development and property values in the area. (Source: StockWatch, 6 June 2026)

Wednesday, 3 June: From 1 July — rent above €500 must be paid by electronic means only

The Cyprus Tax Department (Τμήμα Φορολογίας) issued an official reminder on 3 June: from 1 July 2026, under Article 48A of the Assessment and Collection of Taxes Law (N.4/1978), enacted as part of the tax reform, rent payment for a property in Cyprus must be made solely via (a) bank transfer, (b) debit or credit card, or (c) any other recognised electronic payment method. The text of the law sets a clear threshold: the obligation applies when "the total monthly amount equals or exceeds five hundred euros (€500)." The major advisory firms concur: per PwC Cyprus, rent payments that do not meet the requirements of Article 48A will not be recognised as a tax-deductible expense; KPMG, Philippou Law, and further legal sources (Lexology, Mondaq) likewise state explicitly "rent above €500 per month." The practical effect: for rent above €500, cash payment will no longer be recognised as a lawful payment, and a landlord who does not receive payment by electronic means will lose the tax benefits (including the 20% allowance on gross rent). The move aims to curb tax evasion and increase transparency. (Sources: text of Article 48A as cited in Lexology and PwC; Mondaq Cyprus; KPMG; Philippou Law; Tax Department notice / AlphaNews, 3 June 2026)

Market indicator: Land Registry data — an 11.9% rise in the first five months of 2026

(A statistical figure, not a regulatory one.) According to official data from the Department of Lands and Surveys published on 3 June, 8,043 sale contracts were filed at the district land registry offices in the first five months of 2026, compared with 7,185 in the same period of 2025 — a rise of 11.9%. Compared with 2019 (pre-pandemic), when 4,846 contracts were filed in the same period, this is a 66% increase. By district over the five months: Limassol retained first place in absolute transaction count with 2,537 contracts (an annual rise of 11.2%); Nicosia with 1,749 contracts (up 5.7%); Larnaca with 1,747 contracts (up 12.4% — and, compared with 2019, up 160.7%, the highest of all districts); Paphos with 1,631 contracts (up 19% — the highest annual growth rate); and Famagusta with 379 contracts (up 17%). In May alone, by contrast, a relative slowdown was recorded: 1,723 contracts, up just 4.8% versus May 2025; Nicosia even posted a 12% drop and Famagusta an 8% drop that month. (Source: StockWatch / Department of Lands and Surveys, 3 June 2026)

Thursday, 4 June: A major investment in Pentakomo (Limassol) — the "The Rocks" project in the environmental-review stage

On 4 June, StockWatch reported a "mammoth investment" (μαμούθ επένδυση) in Pentakomo, in the Limassol district — a semi-rural area between Limassol and Larnaca. According to the report, the project, named The Rocks, is promoted by the company DRL5COMOS PROPERTIES LTD as a mixed tourism-residential development. Per the planning details reported, the project includes a hotel of about 126 rooms, around 26 villas, around 73 apartments, and a beachfront service area, with operations estimated to begin in 2029. The project is at the environmental-planning stage — an environmental impact assessment has been submitted to the Environment Authority within a public consultation process. It is important to be precise: the project is at the environmental and planning stage, not in final approval, and should therefore not be presented as a certain project for execution; the numerical details are taken from media reporting and the public process, and have not been fully verified against an additional official source as of the publication of this roundup. (Source: StockWatch, 4 June 2026)

Regulatory backdrop in force in 2026: Tax Circular 3/2026 — the tax treatment of brokerage commissions and fees

The Tax Department published Tax Circular 3/2026 (Εγκύκλιος 3/2026) on 29 May, on commissions and fees for real estate brokerage and other services rendered to complete transactions involving immovable property located in the Republic of Cyprus. The item was included in KPMG Cyprus's weekly economic update (Economics Weekly Alert 20/2026, dated 5 June) and was also published by the Cyprus Employers and Industrialists Federation (OEB). The circular addresses the recognition and tax treatment of payments to licensed brokers and other service providers involved in completing real estate transactions — a matter with direct implications for property owners, buyers, sellers, brokers, lawyers, developers, and real estate companies. The background: commissions to licensed real estate brokers are deductible for tax purposes (including for capital gains tax) subject to proper documentation. The practical effect of the circular: reinforcing the requirement for proper documentation of commissions, a clear identity of the payment recipient, and proof that the service was provided within a genuine real estate transaction — as a condition for recognising the payment. (Sources: KPMG Cyprus Economics Weekly Alert 20/2026; OEB website. This does not constitute tax advice.)

Rental taxation: abolition of the Special Defence Contribution (SDC), new payment dates, and loss of allowances for those paying in cash

As part of the tax reform approved by the Cypriot Parliament on 23 December 2025 and effective from 1 January 2026, substantial changes have taken effect in the taxation of rental income. First, the Special Defence Contribution (SDC / έκτακτη αμυντική εισφορά) on rental income was abolished — so rental income is now subject only to personal income tax and the General Healthcare System contribution (GHS / ΓΕΣΥ). Second, new payment dates were set: property owners are required to report and pay income tax on rent on two dates — 31 July and 31 December of each tax year. Third, stamp duty (χαρτοσήμανση) on rental contracts was abolished from 1 January 2026. Fourth, in the context of the electronic-payment obligation (see above): a landlord who does not receive rent by electronic means automatically loses the standard 20% allowance (for maintenance and wear) on gross rent, the capital allowances for renovations and energy upgrades, and the recognition of insurance premiums as a deductible expense. (Sources: summaries by Cypriot law firms and gov.cy documents on the 2026 tax reform. This does not constitute legal or tax advice.)

Reminder: abolition of stamp duty on sale contracts, corporate tax raised to 15%, and capital gains tax of 20%

A further summary of the legislative changes in force from 1 January 2026: stamp duty (Stamp Duty) on most contracts and documents, including sale contracts, has been abolished — a direct saving for buyers. In parallel, as part of the tax reform, the corporate tax rate rises from 12.5% to 15% (affecting real estate development companies). Capital Gains Tax on the sale of immovable property in Cyprus remains 20%, but an exemption exists on the sale of a primary residence valued up to €450,000 under certain conditions. Note: there is uncertainty regarding documents signed abroad before 31 December 2025 and brought into Cyprus after 1 January 2026 — each case should be reviewed on its merits with a lawyer. (Sources: Cypriot law firms summarising the 2026 tax reform laws. This does not constitute legal advice.)

Upcoming reminder for first-home buyers: the 15 June 2026 deadline for the reduced 5% VAT under the old regime

An important reminder given the proximity of the deadline: per the Tax Department notice of 4 May 2026 (as reported by KPMG Cyprus), different deadlines apply for an application for the reduced 5% VAT (instead of 19%) for the purchase or construction of a primary residence under the old regime (which allows the reduced rate on the first 200 m²), in line with amending law N.109(I)/2026 published on 24 April 2026. Where the planning permit was obtained or filed by 31 October 2023 and the building permit obtained by 31 December 2024, the application deadline remains 15 June 2026. Where the building permit was obtained after 1 January 2025 (or not yet obtained by 31 December 2026), the Tax Department will accept applications between 16 June and 31 December 2026. The application is submitted solely through the Tax For All (TFA) portal. The practical takeaway: buyers and developers should urgently check whether their transaction falls under the old or the new regime and which deadline applies to them. (Source: KPMG Cyprus Economics Weekly Alert 16/2026, citing the Tax Department notice of 4 May 2026. This does not constitute tax advice.)

Ongoing European backdrop: tighter anti-money-laundering checks in real estate transactions and the "source of funds" procedure

Cyprus, as an EU member and a financial and real estate services hub, is undergoing a continuous tightening of source-of-funds checks, beneficial-owner identification, and compliance with anti-money-laundering (AML) rules in real estate transactions. The "source of funds" procedure has become a central step in every property purchase: a buyer is required to prove the source of funds through documents (tax statements, bank account confirmations, income certificates, and the like), and Cypriot banks are requesting more comprehensive documentation than before, especially from foreign buyers. To be precise: the European AMLR/AMLD6 package is not news from this week — it was published in 2024, and a key part of the new European framework is expected to apply mainly from 2027. In other words, this is an ongoing backdrop rather than a change that took effect in the week under review. Further context: Cyprus's "citizenship by investment" programme (the "golden passport") was permanently abolished back in 2020. (Sources: summaries by Cypriot law firms; the European AMLR/AMLD6 framework. This does not constitute legal advice.)

European context: the ECB's interest rate policy continues to affect the Cyprus mortgage market

As a member of the eurozone, financing conditions in Cyprus are largely determined by the interest rate policy of the European Central Bank (ECB). After the 2022–2024 rate-hiking cycle, the ECB moved to rate cuts during 2025, which improved financing conditions in Cyprus. As of March 2026, the average rate on new housing loans in Cyprus stood at about 3.15%, and on existing loans at about 3.48% — both down from a year earlier, but still above pre-2022 levels. That said, it should be noted that in recent weeks European commentators have assessed that the ECB may again consider a rate increase against the backdrop of an emerging "energy shock" — a development that, if it materialises, could again weigh on mortgage borrowing in Cyprus. As of the date of this roundup, these are assessments only and not an official ECB decision. (Sources: rate data — Global Property Guide, relying on the Central Bank of Cyprus; ECB assessments — StockWatch.)

The content of this roundup is journalistic and informational in nature and does not constitute legal, tax, or investment advice. For any decision concerning real estate, taxation, or regulation in Cyprus, consult a lawyer or a qualified advisor.