North Cyprus Property Purchase taxes
Property Tax in North Cyprus real estates / property purchasing taxes.
What taxes are payable on the purchase or when selling property in Northern Cyprus?
In Northern Cyprus Property purchase Taxes are usually payable right at the end of the transaction after your purchase permit has been granted and the title deeds are being transferred into your name. But developers require to get VAT to be paid on the sale price at the date of delivery of possession of the property in North Cyprus
However, the current property sale or purchase taxes in North Cyprus are as follows:
Land Registry Transfer Fee – 6%. However, every person has a once in a lifetime to reduce this Transfer Fee tax in North Cyprus to 3%.
When you sell your property in Northern Cyprus again you have once in a lifetime option to not pay stoppage tax otherwise it’s 4 % for individuals.
VAT – 5%
VAT is applicable only in the case where the vendor is a Professional property seller/trader/developer or constriction company. The VAT is payable by the purchaser unless parties agree on different terms in the Contract of Sale.
Stamp Duty – 0.5%
Northern Cyprus property purchasing taxes. The stamp duty is payable to the Tax Office in North Cyprus at the rate of 0.5% of the sale price, before the registration of the Contract of Sale at the District Land Office.
Buying property abroad may involve different legal and financial implications than back where you live. Therefore you must be aware of concepts like the cost of buying property in North Cyprus.
Under the laws of the Turkish Republic of Northern Cyprus (non Citizens are entitled to take the title of only one property up to a maximum area of 5 donums per person providing that the property must have only one unit house on maximum 5 donum.)
Thanks to new regulations, NOW, husband and wife may purchase one property each in their own names., (previously, this was one property, per household, husband and wife were counted as one household, but this has since changed).
Before the title deeds to the property can be registered in your name, you will need to have permission from the Council of Ministers.
However if you wish to buy or invest in more than one property, or a property over 5 donums in area, than you must use trustees or you can set up a TRNC L.T.D company to be able to invest in multiple properties.
This company may cost you around 5-7 thousand GBP and yearly running cost minimum of £4000, however, you can keep this company as an un-active company to avoid taxes. All Contracts of Sale for the purchase of immovable property in Northern Cyprus must be registered at the District Lands Office within 21 (twenty-one) days of being signed, and it is now com-pul-sory for the Stamp Duty to be paid at the rate of 0.5% before registration, can take place.
Once the Contract of sale is registered, the purchaser is protected against the land being sold to a third party and the Contract will take priority over any subsequent encumbrance.
Anyone wishing to purchase property in Northern Cyprus should be aware that there are risks as in many other countries. There have been cases where people have experienced problems due to misleading advertising, breach of Contract by > vendors/builders, non-completion or late completion of off-plan properties, or taxes have been charged incorrectly.
Now let’s talk about taxes:
What taxes are payable on the purchase – and when are these payable?
which is payable within 21 days of the date of the Contract as I have mentioned above is 0.5%.
Then we have Vat which is 5% on new developments that the buyer is responsible to pay however some resale properties are also due to VAT to be payable by new buyers because previous buyers never paid it when they purchase on off plan.
A then for last, buyers have a transfer fee which is 6%.
if its your first purchase in North Cyprus then every person has a once-in-a-lifetime exemption to reduce this tax to 3%. If you decide to use your option right. this is when your purchase permit has been granted ( where it takes 11-12 months) and the title deeds are transferred into your name
Not to forget the vendors, where we agents call them sellers are responsible for they stopaj tax, which is 3% or for some countries its called Capital gains tax .
Also if the property Title Deed is in the name of a Company, constructor, trader or a Trust Company the taxation rate will be 4.5% for the seller.
The good news is, At present there is a one-time sale option introduced by government where you do not have to pay stopaj tax on your first sale and you can choose to use that one time sale option or use it on a further sale.
Overall: if you buying resale you will pay TOTAL 3.5% subject to vat if its paid, if not than 8.5%, but if you buying new development property than you must pay 8.5% total.