North Cyprus Property Costs
Cost of purchasing property in North Cyprus
The taxes are calculated based on the contract price and are currently at the following rates:
Tax Payable at the time of signing of the contract, by the buyer
• Stamp duty 0.5% of contract price.
Tax Payable by the buyer at the time the deeds are transferred into the buyers’ name.
A Land Registry transfer fee of 6% of the contract price. However, every buyer has a once in a lifetime option to reduce this fee from 6% to 3%. At the time of transfer, you will be asked whether you wish to use this option and therefore you will only pay 3% of the contract price.
In addition 1% of the transfer fee, not the contract price, is payable to the local council.
If the North Cyprus property vendor is a professional seller (has sold more than 3 properties in any one year) then VAT at 5%.(known as KDV) must be paid on the contract price. The contract should state whether the vendor or the purchaser should pay the VAT, normally it is the purchaser. This is paid on transfer of deeds, but there is at present a suggestion that this may be changed to handover of keys.
The sales process will come to an end when all of the above taxes are paid and the title deeds are registered in the buyer’s name. Those who choose apartments, or villas on large complexes, may find that they receive a Shared Title Deed with their property designated to them on the title deed. This in no way diminishes the value of your title deed and in no way causes you any problems should you one day decide to sell.
So if you buy a property for £100,000 you would pay the following in tax:
0.5% stamp duty on signing of contract £500
On transfer of deeds into your name:
5% VAT £5000
3% Transfer tax £3000
1% council tax of transfer fee £30
Investors get around these taxes by not getting the deeds into their name and just selling on their contracts.
There is an annual property tax, equivalent to council tax, depending on size of property, about £100 to £150 per annum.
Fees payable by the Vendor
You should also be aware that the vendor has to pay a 6.25% tax on hand over of deeds, this is sometimes called Capital Gains Tax or Stoppage Tax. This assumes that the vendor is a professional seller.
A question that is often asked is, how much tax will I have to pay if I decided to sell my property? The answer to this is assuming you are not a professional seller then it is 3.5% of the sale price. However, if it is your first sale then you are exempt. So to put it another way, there is no tax to pay at all if you are a private seller and it is your first sale.
“Further advice from Homebuyers Estate Agency, if you are in intending to sell the property you bought in North Cyprus then by not putting the deeds into your name you considerably reduce your tax liability. You will of course still have security because you will have a contract registered in your name against the deeds of the property.”