If you’re considering purchasing a property in North Cyprus, it’s essential to have a clear understanding of the costs associated with buying property. Compared to other countries, buying a property in North Cyprus offers a more cost-effective option. However, it’s important to be aware of additional costs related to legal procedures, including real estate taxes, attorney fees for deed transfer, etc., before embarking on the buying process.
Table of Contents:
- Title Deed Transfer Fee
- VAT (KDV)
- Capital Gains Tax (Stopaj)
- Stamp Duty
- Legal Fees
- Real Estate Agent Fees
- Annual Property Tax
- Conclusion
Title Deed Transfer Fee
Title deed transfer taxes vary based on the buyer’s citizenship. Northern Cyprus and Turkish citizens are required to pay a 6% title deed transfer tax when buying real estate in North Cyprus. Additionally, if they are first-time buyers, they will incur an additional title deed fee of 3%. On the other hand, foreign citizens are subject to a 12% title deed transfer tax. A sales contract is prepared, accounting for 6% of the total fee, while the remaining 6% is paid after receiving the title deed.
VAT (KDV)
The Land Registry Cadastre requests a copy of the sales contract to calculate the VAT. Currently, the VAT rate is 5% for first-time sales, but there is no VAT applied to resale properties.
Capital Gains Tax (Stopaj)
Typically, the seller is responsible for paying the Capital Gains Tax. The Land Registry Cadastre requires a copy of the sales contract to calculate this tax. For-profit firms pay a 4% tax, while non-profit amateur sellers pay a reduced rate of 2.8%. Non-profit sellers are exempt from this tax once in their lifetime and they can choose when to use their exemption.
Stamp Duty
The Land Registry Cadastre calculates the stamp duty based on the sales contract. Generally, the buyer is responsible for paying this fee. All sale contracts must be registered at the Land Registry Office within 21 days of signing, and the stamp duty, currently set at 0.5%, must be paid at the Tax Office before registration.
Legal Fees
To ensure a secure purchasing process, it is advisable to notarize all property purchase contracts and engage the services of a lawyer. Legal fees typically range from £1,000 to £1,500+ (inclusive of 16% VAT).
Real Estate Agent Fees
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Annual Property Tax
In North Cyprus, the annual property tax is calculated per square meter. For residential properties up to 120 m², the tax is 1.85 TL per square meter, while for residential properties over 120 m², it is 2 TL per square meter. This tax is paid by the seller only once, but as the new owner, you will be responsible for paying this tax after purchasing the property. Generally, the tax is paid in April and October each year.
Conclusion
Purchasing a property in North Cyprus can be a cost-effective choice, but it’s crucial to understand the associated expenses. From title deed transfer fees and VAT to capital gains tax and stamp duty, each cost contributes to the overall purchase price. Legal fees are necessary to ensure a secure transaction, and annual property taxes are an ongoing obligation. By considering these costs upfront, you can budget accordingly and make an informed decision.
