Press Room

The protection of your home is one of the most important investments for you and your family. From 1 January 2026, the State further recognises the importance of home insurance by providing a tax deduction for premiums relating to coverage against natural disasters.

What does this mean for you?

If you are a homeowner and your insurance policy includes coverage for natural disasters such as fire, earthquake, flood, and other related natural perils, you may benefit from a tax deduction of up to €500 per year from your taxable income.

If your insurance policy also includes additional covers, such as theft or other insured risks, the tax deduction continues to apply to the total premium, without requiring any allocation or separation

Key points

• The tax deduction applies to premiums paid from 1 January 2026 onwards.
• The maximum amount of premiums eligible for tax relief is €500 per taxpayer per tax year.
• The scheme applies to:
  • primary residence
  • holiday home
  • rented property
• There are no income criteria for eligibility.
• This amount is not included in the general limit of other tax deductions (1/5 of net income), but is deducted additionally from taxable income.
• The deduction also applies to pensioners with taxable income (e.g. from pensions, rent, or other sources).
• It is not granted to persons who are not subject to income tax or who are not tax residents of Cyprus.

What applies to families?

For the primary residence, the tax reform provides a special arrangement allowing spouses or cohabitants to share the tax deduction between them.

Each spouse or cohabitant may benefit from a deduction of up to €500, regardless of:

• who owns the property
• in whose name the insurance policy is issued.

The allocation of the deduction is made according to the choice of the two spouses.

For holiday homes or rented properties, the deduction is granted exclusively to the owner of the property.

Insurance of apartments through a building insurance policy

The tax deduction also applies to owners of apartments covered under a joint building insurance policy. In such cases, the portion of the premium corresponding to each apartment is taken into account, based on the allocation of the total insurance premium among the owners.

How can you benefit?

The deduction is claimed when submitting your annual income tax return.

We recommend that you keep your insurance policy and proof of premium payment, as these may be requested by the Tax Department.

Examples of taxable income reduction:

Example 1:

A family with two spouses owns:

• Primary residence (owned by Spouse A) with annual premium €700
• Holiday home (owned by Spouse A) with annual premium €500

The premium of the holiday home can only be claimed by Spouse A, as they are the owner of the property.

In contrast, the premium of the primary residence may be shared between the two spouses according to their

• Spouse A: Claims a deduction for €500 relating to the holiday home.
• Spouse B: Claims a deduction for €500 relating to the primary residence.

Example 2:

A family with two spouses owns:

• Primary residence (owned by Spouse A) with annual premium €600
• Holiday home (owned by Spouse A) with annual premium €350

Spouse A may claim:

• €350 for the holiday home, and
• an additional €150 from the primary residence premium, in order to reach the maximum amount of €500.

Spouse B may claim a deduction for the remaining part of the primary residence premium, i.e. €450.

Example of tax benefit

The tax deduction reduces taxable income, and the actual benefit depends on the tax rate applicable to each taxpayer.

Indicatively:

• for an individual taxed at 30% who pays an insurance premium of €700, the maximum eligible amount is €500, resulting in a tax benefit of €150 (€500 × 30%).
• for an individual taxed at 30% who pays an insurance premium of €400, the full amount is taken into account, resulting in a tax benefit of €120 (€400 × 30%).

The above amounts are indicative, and the final tax benefit depends on each taxpayer’s individual tax situation.

For more information or clarifications regarding your insurance policy, please contact us.