What taxes and additional payments does the buyer pay in Northern Cyprus when purchasing real estate (concluding a sales contract)?
Stamp Duty.
The buyer pays stamp duty to the tax authority, unless the parties stipulate a different procedure in the purchase and sale agreement. The fee is 0.5% of the price of the property specified in the purchase and sale agreement.
Capital gains tax (Stopaj tax).
The tax is paid by the seller unless the parties agree otherwise. The tax rate is different and depends on whether the seller is a professional (company or individual who sold more than three (3) properties) or an individual. The tax rate for a professional seller is 4% of the contract price; for a private individual - 2.8%.
VAT (VAT; KDV).
VAT is paid by the buyer in the amount of 5% of the contract price. The parties may agree to defer the payment of VAT by the buyer until registration and transfer of title to the property.
Transfer Tax
The buyer pays the tax. Previously, foreigners had a one-time right to pay a 3% fee for transferring the title into their name. Subsequent sales of objects were subject to a 6% tax.
Currently, the buyer is required to pay a tax of 6% when registering with the Land Registry (TAPU) and another 6% when transferring the title to his name. Thus, the full tax on the transfer of property rights for a foreigner is 12%. From time to time, the state applies amnesties when foreign buyers have the opportunity to transfer the title of ownership at a preferential rate - 1% of the value of the property (indicated in the purchase and sale agreement). For Turkish citizens, the initial title transfer tax of 3% has been retained.
Additional payments:
Transformer fee (trafo) is an additional payment that is paid by the buyer to the developer when commissioning new housing for connecting electrical communications and water supply. Varies from £1,500 to £3,000 and is specified in the purchase and sale agreement.
Electricity and water meters - paid for and connected by the buyer to Kibtek and the public water supply service, the total cost does not exceed £500-800.
Assignment of a purchase and sale agreement is an additional payment, the amount of which is usually specified in the purchase and sale agreement and is paid by the owner to the developer (holder of the title of ownership) upon assignment of rights to the new owner (buyer). Varies from £500 to £3000.
This payment loses relevance for the owner if he has re-registered the title of ownership in his name before the sale of the property. In this case, you do not need to contact the developer to carry out the purchase and sale transaction; the contract can be drawn up by a lawyer.
ATTENTION! It is very important that the purchase agreement states which taxes will be paid by the seller and which by the buyer.
