From July 1, 2026, the rental housing market in Cyprus will face major changes. The authorities are introducing new rent payment rules designed to make the market more transparent and reduce hidden income. Official payments for apartments and houses are expected to move exclusively to cashless methods. This applies both to long-term rentals and to some commercial agreements. The new measures are already being actively discussed by both landlords and tenants, as many transactions on the island are still carried out in cash.
What Will Change for Tenants and Property Owners
Under the new requirements of the Cyprus Tax Department, rent payments will only be accepted via bank transfers, cards, or electronic payment systems. The authorities want to completely eliminate the practice of handing over cash without reflecting it in tax records.
Formally, cash payments and checks will no longer be considered acceptable methods for official rent payment. At the same time, the tax authorities are still preparing final instructions on how the new rules will be applied, so the market is waiting for further clarification. This is especially relevant for private arrangements between owners and tenants, which have long been common practice in Cyprus.
Real estate market experts believe the changes will primarily affect the long-term rental segment in Limassol, Nicosia, Larnaca, and Paphos, where demand for housing remains high and rental prices continue to rise amid a shortage of apartments.
Why Cyprus Is Tightening Control Over Rentals
The main goal of the reform is to combat tax evasion. According to the authorities, a significant portion of rental income is not declared. A cashless system will allow the Tax Department to track the movement of funds and compare property owners’ actual income with their tax returns.
At the same time, the state is actively moving tax services into digital format. More and more operations are now carried out through the Tax For All online platform, which is gradually becoming the main system for interacting with the tax authorities. Against the backdrop of rising property prices and a growing number of foreign tenants, the authorities aim to make the market more transparent and understandable both for the state and for the participants in rental transactions.
What Benefits Are Promised to Tenants
For those who pay rent officially, the authorities are preparing tax benefits. Starting from the 2026 tax year, tenants will be able to receive a tax deduction of up to €2,000 for rent on their primary residence and mortgage interest. However, only those whose payments are made officially through the banking system will be able to use this benefit. Handing over money “cash in hand” will no longer qualify for tax relief. The benefit applies to citizens with annual income above €22,000. The authorities believe this measure should encourage tenants to demand official contracts and transparent payments.
What Awaits Property Owners
For apartment owners, the changes mean stricter tax control. All rental income will become much more visible to the state, making it significantly harder to conceal. At the same time, Cyprus is updating its income tax scale. Income from €22,001 to €32,000 will be taxed at 20%, from €32,001 to €42,000 at 25%, from €42,001 to €72,000 at 30%, and anything above €72,001 at 35%.
Penalties are provided for violations of the new rules. The tax authorities have already warned that they will pay special attention to the residential rental market, which has long remained one of the least transparent sectors of the economy.
Online Control and New Digital Procedures
In parallel, the authorities continue to digitalize the tax system. Applications for VAT exemption when renting property are now submitted exclusively through the Tax For All platform. The form must be filed within 30 days after the lease agreement is signed. A copy of the agreement, proof of identity, and, for companies, registration documents must be attached to the application. In practice, this means that the Cyprus real estate market is gradually moving toward a fully digital format, where every transaction and every payment leaves an official electronic trail.
Experts believe some landlords may try to raise rents to compensate for future tax costs. This is especially likely in popular areas of Limassol and tourist zones, where demand remains consistently high.
At the same time, the new rules may provide additional protection for tenants. Official payments and transparent contracts reduce the risks of disputes, sudden evictions, and problems confirming residence. The rental market in Cyprus is gradually becoming more regulated and digital. Although many owners are still cautious about the new rules, the authorities are making it clear: the era of “gray” rentals on the island is gradually coming to an end.