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Proposed Tax Reform: Minister Considers Raising Family Income Thresholds for Enhanced Deductions

Finance Minister Opens Door to Adjusted Income Limits

In a decisive parliamentary session marking the commencement of discussions on the proposed tax reform legislation, Finance Minister Makis Keravnos introduced the concept of revising the annual family income thresholds used to qualify taxpayers for additional deductions. This move signals a willingness to reconsider eligibility criteria to better reflect the evolving economic landscape.

Structured Tax Brackets and Expanded Relief Measures

The proposed reforms outline a significant adjustment in tax-free allowances and progressive tax brackets. The tax-free threshold is set to rise to €20,500, with additional incremental increases based on factors such as the number of children, students, and existing housing loans. Under the new scheme, incomes from €20,501 to €30,000 would be taxed at 20%, those between €30,001 and €40,000 at 25%, incomes from €40,001 to €80,000 at 30%, and earnings exceeding €80,000 would face a 35% rate. Notably, some taxpayers will only be able to claim further relief if their annual income does not exceed €80,000, although Minister Keravnos mentioned that an increase to €90,000 is also under consideration.

Family-Based Deductions and Detailed Relief Structures

The legislation places special emphasis on family composition, offering additional tax exemptions accordingly. Households with a gross annual income of up to €80,000 qualify, with the threshold raised to €100,000 for larger families. More detailed deductions include a €1,000 annual reduction for each spouse, partner, or sole earner for every dependent child and student, doubling to €2,000 for single-parent families. Furthermore, taxpayers may avail an annual €1,500 deduction for interest on loans for primary residences or rental expenses, and an additional €1,000 deduction for capital expenditures related to energy upgrades and electric vehicle investments, which is transferable over the following four years.

A Strategic Adjustment to National Fiscal Policy

By considering an increase in the income threshold and refining tax brackets, the government aims to balance fiscal discipline with enhanced support for families. This initiative not only bridges the gap between economic realities and tax policy but also reflects an adaptive approach to managing public finances in challenging economic times.

Cyprus Residential Market Surpasses €2.5 Billion In 2025 With Apartments Leading the Way

Market Overview

In 2025, Cyprus’ newly built residential property market achieved a remarkable milestone, exceeding €2.5 billion. Data from Landbank Analytics indicates robust activity countrywide, with newly filed contracts reaching 7,819, including off-plan developments. This solid performance underscores the market’s resilience and dynamism across all districts.

Transaction Breakdown

The apartment sector clearly dominated the market, constituting 81.6% of transactions with 6,382 deals valued at €1.77 billion. In contrast, house sales represented a smaller segment, encompassing 1,437 transactions and generating €737.9 million. The record-high transaction was noted in Limassol, where an apartment sold for approximately €15.2 million, while the priciest house fetched roughly €6.2 million.

Regional Analysis

Nicosia: The capital recorded steady domestic demand with 2,171 new residential transactions. Apartments accounted for 1,836 deals generating €349.6 million, compared to 335 house transactions worth €105.5 million, anchoring Nicosia as a core market with average values of €190,000 for apartments and €315,000 for houses.

Limassol: As the island’s principal investment center, Limassol led overall activity with 2,207 transactions. Apartments dominated with 1,936 sales generating €824.1 million, while 271 house transactions added €157.9 million. The district enjoyed premium pricing, with apartments averaging over €425,000 and houses around €583,000.

Larnaca: This district maintained robust activity with a total of 2,020 transactions. The apartment segment realized 1,770 transactions worth €353 million, and houses contributed 250 deals valued at €96.3 million. Average prices hovered near €200,000 for apartments and €385,000 for houses, positioning Larnaca within the mid-market bracket.

Paphos: With a more balanced mix, Paphos completed 1,078 transactions. Ranking second in overall value at €503.2 million, the district saw house sales generate €287.8 million and apartments €215.4 million. Consequently, Paphos achieved the highest average house price at approximately €710,000 and an apartment average of €320,000, emphasizing its premium housing profile.

Famagusta: Distinguished by lower transaction volumes, Famagusta was the sole district where house sales outnumbered apartment deals. Out of 343 transactions, 176 involved houses (yielding €90.4 million) and 167 were apartments (at €32.4 million). The segment’s average prices were about €194,000 for apartments and over €513,000 for houses, signaling its focus on holiday residences and coastal developments.

Sector Insights and Forward View

Commenting on the report, Landbank Group CEO Andreas Christophorides remarked that the analysis demonstrates an ecosystem where apartments are the cornerstone of the real estate market. He emphasized, “The apartment sector is not merely a trend; it is the engine powering the country’s real estate market.” Christophorides also highlighted the diverse regional dynamics: Limassol leads in apartment pricing, Paphos commands premium house prices, Nicosia remains pivotal to domestic demand, Larnaca sustains competitive activity, and Famagusta caters to holiday home buyers.

In a market characterized by these varied profiles, informed monitoring of regional and sector-specific dynamics is crucial for investors aiming to make targeted and strategic decisions.

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