Cyprus has introduced two bills offering significant tax incentives to property owners who let their properties at affordable rates, as part of the Interior Ministry’s “Renovate-Rent” programme.
The legislation, tabled in parliament on Thursday, will exempt qualifying rental income from income tax, corporate tax, and defence contributions for three years.
Property owners will also be eligible for increased capital allowances of up to 20 percent.
Under the scheme, affordable rent is defined as 30 percent below market rates.
The Interior Ministry will publish a comprehensive list of market rates on its website and affordable housing platform, categorised by district, municipality, and property type.
The new measures include an increase in capital allowances for buildings from 3 to 5 percent, and for machinery and equipment from 10 to 15 percent.
These enhanced allowances will be available to both individuals and legal entities for purchases made between 2024 and 2027.
The income tax exemptions are expected to cost the government €1.75 million annually during this period, totalling €5.25 million.
A separate bill amends the Special Defence Contribution Law, eliminating the 3 percent defence levy on rental income from properties let under the scheme.
This measure is projected to cost €100,000 annually, or €300,000 over the three-year implementation period.
To qualify for affordable housing, tenants must meet specific income criteria and cannot be related to the landlord.
The gross family income thresholds are set at €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, and €65,000 for families of five or more.
