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Why invest in North Cyprus Property?
Taxes Guide For Property Transactions In Northern Cyprus
Why invest in North Cyprus Property?    [Back to Top]
1. Real estate in North Cyprus has been beginning to boom since 2004 when the citizens of North Cyprus voted yes to the proposed United Nations "Annan" Plan and yes to the peaceful reunification of Cyprus and were immediately rewarded with EU aid and an increase in foreign direct investment.
2. Since 2004 property investment into Northern Cyprus has been freer flowing and consistent, and the amount of money spent by the government on infrastructure and amenity improvement and development has been impressive.
All indicators point to a long term upward trend in real estate prices in North Cyprus.
3. A very high demand for north cyprus properties to rent. Many UK based tour operators have begun to showcase North Cyprus brochures and the city of London is advertising North Cyprus on buses and in underground stations. As a result, the profile of this stunning Mediterranean destination is becoming more widely known.
4. Northern Cyprus has five major universities which are receiving investment from the United States of America and the Middle East. All of which have expanded their student numbers in 2005 & 2006. Students require accommodation and the amount of campus based student accommodation is restricted - this presents both the residential and commercial real estate investor with opportunity and potential.
5. Real estate investors have such choice and opportunity for growth and strong yield in North Cyprus it is no wonder that the Turkish Republic of Northern Cyprus is receiving such intense worldwide media interest and that the numbers of those traveling to the country to explore investment opportunities is at an all time high.
6. Tax considerations: No capital gains taxes on individuals, easy re-selling of property, etc. For more on this issue please see our following Northern cyprus Property taxes section.
Taxes Guide For Property Transactions In Northern Cyprus     [Back to Top]
by Akan Gurkan LLB (University of Warwick)
Property Department Gurkan and Gurkan Advocates and Legal Advisers
There are mainly three kinds of taxes involved in any property sale transaction in Northern Cyprus. These taxes are:
1. The transfer fee which is payable to District Land Registry Office.
2. The capital gains tax which is payable to the Income & Tax Office
3. The VAT which is payable to the Income & Tax Office.
Although this can be varied by the parties to the Contract of Sale, the capital gains tax is usually payable by the vendor and the transfer fee is usually payable by the purchaser. VAT (KDV in Turkish) is also subject to the terms of the Contract of Sale, which should specify whether or not the sale price includes or excludes VAT.

The percentage of capital gains tax levied depends on whether or not the vendor is a ‘professional vendor’ as defined by the law (i.e. whether the transaction is of a commercial nature or for profit).

The table below indicates the percentages of capital gains taxes levied accordingly. The percentages given below are levied on the assessed value of the property, which is calculated by the Land Registry Department just before transfer of title takes place. When such valuations are carried out, the property is assessed in the state that it is in at the date of the valuation i.e. if there is a new building on the property, this will be included in the assessment of the value of the property.
The transfer fee payable is 6% calculated on Land Registry Department’s valuation of the property purchased with the option to pay only 3%. Once this option right is used, the transfer fee payable is 6% for all future transfers.
Investment & Taxes

VAT is levied only on sales where the vendor is a ‘professional vendor’. What is the definition of a ‘professional vendor’?
A professional vendor is a limited company or an individual person who has sold more than three immovable properties within one year or an individual person who is deemed to be in the construction or eal estate business and is deemed to be a professional vendor.

Will I have to pay VAT on my property purchase?
In determining whether you will be liable to pay VAT on your property purchase in Northern Cyprus, you need to establish:
a. whether the vendor is a professional vendor as defined above and
b. whether your contract requires you to pay the VAT.

Capital Gains Tax on property transactions in Northern Cyprus

Will I have to pay Capital Gains Tax on my purchase?
Generally, no. Capital Gains Tax is usually paid by the Vendor, unless otherwise stipulated in your contract.

Will I have to pay Capital Gains Tax on the sale of my property? If so, how much will this be ?
This depends on whether you are a private individual or a professional vendor (as defined above): Every individual person in Northern Cyprus has a once in a lifetime tax free sale option (for a house and land not exceeding approximately 1 donum). If you use this option, you will not be liable to pay Capital Gains Tax on that first 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%.

What if I sell my property before taking title? Will I still have to pay Capital Gains Tax?
Capital Gains Tax is not payable if you sell the property before taking title by doing an assignment of contract. However, you will have to pay stamp duty on the contract which is charged at 0.5% of the contract value, if you pay within 2 months of signing the Contrat of Sale. This amount is multiplied by 2 if you pay within 2 to 6 months of signing the Contract and is multiplied by 3 if you pay after this period.

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