Residents and non-residents must pay tax on property income at standard income tax rates, and property income must therefore be included in your annual income tax declaration.
However, a 20 per cent deduction from letting income is allowed, as is any interest on a loan taken out to purchase or improve the property; there’s a further 3 per cent deduction for depreciation.
Residents must pay an additional tax at 3 per cent (known as Special Contribution for Defence) on 75 per cent of their total rental income. Non-residents are not liable to special defence contribution.
This article is an extract from Buying a Home in Cyprus from Survival Books.