Filenews 13 January 2026 - by Eleftheria Paizanou
Taxpayers will be able to benefit from deductions of up to €3,000 per year from income tax as part of the tax reform. These are additional tax deductions for mortgage interest, for rents, for energy upgrade of the main residence, but also for the purchase of an electric vehicle, to which every taxpayer will be entitled, provided that he meets the income criteria set.
Beneficiaries are those with an annual family income of up to €100,000 for families without children or with one or two children, those with an annual gross family income of up to €150,000 for families with three or four children and up to €200,000 for families with five or more children. The tax deduction can be benefited by any spouse or cohabitant, with or without a cohabitation agreement with a common child, as well as the single person.
The €2,000 discount concerns the interest on a performing mortgage loan for the purchase or construction of a main residence in Cyprus. According to the explanatory guide of the Tax Department, a performing loan also includes a loan that has been restructured, provided that the instalments are paid continuously until December 31 of the tax year.
It is worth noting that, in the event that the mortgage loan has been restructured, it is considered performing, provided that the instalments are paid continuously. The discount also applies to rent paid for the use of a main residence in Cyprus. However, if the amount of interest or rent payable is more or less than €2,000, the actual amount of interest or rent paid is granted.
The conditions
The conditions for the provision of the tax deduction are as follows:
For the deduction of interest, the dwelling must be owned by at least one of the two spouses or cohabitants or the single person.
To deduct interest, the performing loan must be in the name of at least one of the two spouses or cohabitants or the single person.
The amount of the deduction granted to both spouses or cohabitants or to the single person does not exceed the actual cost of paying interest or rent.
Any government grants or allowances for mortgage or rent interest reduce the amount of the expense for which a deduction is granted.
The rent must be paid to the owner of the premises by bank transfer, card or a recognized electronic means of payment.
The green discounts
The personal deduction for capital expenditure for the energy upgrade of the main residence and for the purchase of an electric vehicle reaches €1,000 for each taxpayer. Essentially, a deduction is granted for the actual amount of the expense per spouse or cohabitant/cohabitant or single person. And these deductions are based on income criteria, depending on the number of children.
The discount concerns the improvement of the energy efficiency of the main residence in Cyprus, technical energy efficiency systems, renewable energy systems, as well as electricity storage batteries in the main residence, as well as electric vehicles registered with the Department of Road Transport.
In the event that the expense is greater than the deduction of €2,000 provided to both spouses/cohabitants or more than €1,000 provided to the single person in the year of the expense, the balance of the expense may be transferred and granted up to €1,000 per spouse/partner or single person for the next four years, in compliance with the income criteria in each tax year.
It is pointed out that, if the deduction cannot be granted in the year in which the expense is incurred because the income criteria are not met, this deduction cannot be carried forward and granted to subsequent years.
The conditions for exemptions for energy upgrades
The further conditions for securing the discount for energy upgrade costs are as follows:
Any state sponsorship or subsidy from a public treasury (e.g. the "Photovoltaics for All" scheme) reduces the amount of expenditure for which a discount is granted.
The main residence for which the energy upgrade is carried out must be the property of at least one of the two spouses/cohabitants or the single person.
The amount of the discount provided to both spouses or cohabitants or to the single person does not exceed the total actual expenditure for the energy upgrade of the home or the purchase of an electric vehicle.
