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. For example, on letting income of CY£15,000, you would be taxed as follows:
| Income Tax | CY£ |
| Letting income | 15,000 |
| Exemption | (10,000) |
| Taxable income | 5,000 |
| Deductions (23%) | (1,150) |
| Net taxable income | 3,850 |
| Tax at 20% | 770 |
| SCD | |
| Taxable income | 15,000 |
| Allowance (25%) | (3,750) |
| Net taxable income | 11,250 |
| Tax at 3% | 337.50 |
| TOTAL TAX | 1,107.50 |
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