Tax Incentives for Affordable Housing Rentals Discussed in Cyprus Parliament
New Bills Aim to Address Rent Market Pressures by Encouraging Affordable Housing for Vulnerable Groups
The House Finance Committee is set to begin discussions on Monday regarding two bills that propose tax incentives for property owners renting units at affordable rates.
The first bill exempts property owners from the 3% Special Defence Contribution on rental income generated from affordable rental agreements. The second bill amends the Income Tax Law to provide tax benefits, encouraging property owners to rent units at lower rates under the "Renovate-Rent" plan, which sets specific income criteria for eligible tenants.
According to the first bill, the estimated fiscal impact of the Special Defence Contribution exemption is €100,000 annually from 2024 to 2027.
The second bill offers incentives to both individuals and legal entities to lease their properties at rents 30% below market value. The Ministry of Interior will publish a relevant list on its website and on the Affordable Housing Electronic Platform.
Under the proposed legislation, property owners offering affordable rentals will be exempt from corporate or income tax on the rental income. Additionally, they will be entitled to increased capital allowances—rising from 3% to 5% for buildings and from 10% to 15% for machinery and equipment. These benefits will apply for the duration of the "Renovate-Rent" scheme, with the total fiscal impact estimated at €175 million annually from 2024 to 2027.
Eligible tenants will be those who meet specific income criteria based on their family status. For example, the annual income threshold is set at €25,000 for single individuals, €45,000 for couples or single-parent families, and ranges from €50,000 to €65,000 for families with three to five members.
Both property owners and tenants can submit applications electronically via the Ministry of Interior’s website, the Cyprus Land Development Corporation, or the Affordable Housing Platform. Applications will be evaluated by the Cyprus Land Development Corporation, with approved applications linked to the beneficiaries' tax declarations.
The government aims to ease rental market pressures and increase the availability of housing for vulnerable groups through these two bills.
These proposals are part of the government's broader housing policy framework, approved by the Council of Ministers on October 19, 2023, and October 29, 2024, respectively.
