History of Immovable Property Tax in Cyprus
Learn about Cyprus’s Immovable Property Tax (IPT), its history, reasons for abolition, and impact on property owners. Updated 2025 context. Immovable Property Tax (IPT) was one of the most significant annual taxes levied on property owners in Cyprus. Introduced in the 1980s, IPT was designed to generate government revenue from property ownership, calculated on the basis of 1980 property values.
How IPT Was Calculated
• Based on the total value of property owned by an individual or company.
• Calculated using 1980 valuations, often outdated compared to market values.
• Progressive tax brackets applied, with higher rates for wealthier owners.
• Payable annually to the Tax Department.
Criticism of IPT
• Relied on outdated 1980 valuations, leading to unfair tax burdens.
• Seen as discouraging property ownership and foreign investment.
• Unpopular among local citizens, especially during the 2013 financial crisis.
• Created administrative complexity for property transactions.
Abolition of IPT in 2017
• Government abolished IPT effective January 2017.
• Replaced by modest local municipal taxes and fees.
• Decision aimed at improving Cyprus’s attractiveness as a property investment destination.
• Simplified the property tax system.
Impact on Property Owners
• Abolition reduced annual holding costs significantly.
• Encouraged more foreign buyers to enter the Cyprus property market.
• Increased affordability for retirees and middle-class property owners.
• Boosted real estate transactions in the years following abolition.
Comparison with Other EU Countries
• Many EU countries continue to impose annual property taxes based on market value (e.g., France, Spain, Portugal).
• Cyprus’s decision to abolish IPT sets it apart, making ownership more cost-effective.
• Investors see Cyprus as a low-tax environment compared to other Mediterranean destinations.
Case Study: Pre-2017 Property Owner
A British expat with three properties in Nicosia was paying around €2,000 annually in IPT. After abolition, their annual property-related taxes dropped to under €400 in municipal fees.
Case Study: Post-2017 Investor
A Lebanese investor bought a villa in Limassol in 2018. The absence of IPT was a decisive factor in choosing Cyprus over Greece, where annual property taxes were significantly higher.
Checklist: Taxes Replacing IPT
1. Municipal property taxes (waste, lighting, local infrastructure).
2. Stamp duty at property purchase.
3. Transfer fees when registering ownership.
4. VAT on new properties.
5. Annual sewage board fees.
FAQs on IPT in Cyprus
Q: Do property owners still pay IPT in Cyprus?
A: No, it was abolished in 2017.
Q: Why was IPT abolished?
A: To reduce tax burdens and encourage investment.
Q: What replaced IPT?
A: Modest municipal property taxes and charges.
Q: Did abolition affect foreign buyers?
A: Yes, it boosted investor confidence and reduced annual costs.
Q: How does Cyprus compare to other EU countries now?
A: Cyprus has one of the lowest property ownership tax burdens in Europe.
Final Recommendations
The abolition of IPT marked a turning point in Cyprus’s property market, making real estate ownership more attractive. Foreign and local buyers now benefit from lower annual costs, positioning Cyprus as one of the most tax-friendly property destinations in the EU.