Taxes on exit. How to avoid overpaying the state when you sell your property

You have found a buyer, the price suits you, the deal is close. But before you open the champagne you need to remember Capital Gains Tax (CGT). In Cyprus it is 20% of net profit.

At True Square we often see people paying tax on the gross amount simply because they did not prepare for the exit in advance. Let us look at how to reduce the taxable base legally.

The golden rule of "white receipts"

The main way to reduce the tax is to prove the costs you incurred improving the property. What qualifies: renovation, reconfiguration, installation of solar panels and air-conditioning systems (VRV), landscaping.

The tax office will only accept official invoices and payment receipts. If you paid builders in cash without documents, those costs are your own personal loss. Collect and keep every receipt from the first day of ownership.

Indexation allowance

Few people remember this, but the tax office allows the purchase price to be adjusted for inflation. If you bought a house in 2018 for €300k and are selling in 2026, the purchase cost will be recalculated using the Central Bank's coefficients. This legally reduces your "paper" profit.

Exemptions

Cyprus has lifetime exemptions for individuals:

• First sale. The first €30,000 of profit is not taxed (before 2026 it was €17,086).
• Main residence. If you lived in that house or apartment for more than 5 years (and it is your main place of residence), the exemption can be up to €150,000 of profit (previously €85,430).

Associated costs

Do not forget to deduct from the profit:

• The agency commission (only if there is an invoice and VAT).
• Legal fees on both the purchase and the sale.
• Mortgage interest (if the property was bought with a loan).

A True Square case study (before the 2026 reform)

An investor bought a villa for €500k and sold it 5 years later for €700k.

• Without preparation: tax on €200k of profit = €40,000.
• With our strategy: we accounted for inflation (€20k), documented renovation works (€30k), the agent's commission (€20k) and the main residence exemption (€85k). Result: the taxable base fell to €45k. Tax payable = €9,000.

Saving: €31,000.

Start preparing for the sale on the day you buy. Set up a folder (physical or in the cloud) and scan every contract and payment slip into it. In 2026, when the tax office sees all your transactions through the banking system, "grey" schemes no longer work. Only proper record-keeping works.