F.A.Q's about Property Taxes in North Cyprus.
Q
Will I have to pay VAT on my property purchase?
A
In determining whether you will be liable to pay VAT on your property purchase, you need to establish the following:
whether the vendor is a professional vendor , see Guide to Taxes.
whether your contract requires you to pay the VAT.
Q
Will I have to pay Capital Gains Tax on my purchase?
A
Generally, no. Capital Gains Tax is usually paid by the vendor, unless otherwise stipulated in your contract.
Q
Will I have to pay Capital Gains Tax on the sale of my property? If so how much will this be ?
A
This depends on whether you are a private individual or a professional vendor. See Guide to Taxes. Every private individual has a once in a lifetime tax free sale option (for house and land not exceeding one donum). If you use this option, you will not be liable to Capital Gains Tax on that sale. On all subsequent sales, Capital Gains Tax will be payable at 3.5%, provided you do not sell more than 3 properties in one year, making you a professional vendor.
For professional vendors there are no tax exemption rights. Capital Gains Tax is payable on every sale at a rate of 6.25%.
Q
What if I sell my property before taking title ? Will I still have to pay Capital Gains Tax ?
A
If you are selling your property for more than you paid for it, you may have to contribute towards the Capital Gains Tax. If you have not taken title, the title deeds remain in the previous owners name. Therefore transfer will take place from the previous owner directly to the new purchaser. If the price at which you are selling the property for is more than the price which you paid for the property, the previous owner will, probably object to paying Capital Gains Tax on the new higher price because the previous owner did not actually receive this money. The previous owner may therefore agree to pay the Capital Gains Tax on the price which you paid for the property and request you to pay the Capital Gains Tax on the difference between the price you paid for the property and the price at which you are now selling the property for.
Q
What taxes are payable on the purchase and when are these payable?
A
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. However, some vendors require VAT to be paid on the sale price at the date of delivery of possession of the property.
Please see Guide to Taxes in North Cyprus.
The Partners Abroad team are available to answer any questions that you may have about buying property in North Cyprus . The above is only a guide to buying property and the taxes payable, we always recommend that you seek Legal Advice before you enter into any agreements.
