Real Estate Taxes and Other Closing Costs in North Cyprus

Taxes payable by the purchaser

Stamp Duty: 0.5% of the purchase price due payable at the time of registry of the Contract of Sale (one-time payment, applies to resales)

VAT: 5% of the sale price is due payable at the time of Key-handover to the first owner of the property (one-time payment, only applies to the first buyer)

Title deed transfer fee: 3% of the purchase price (reduced to 1% due to the Pandemic) payable at the time of Title deed transfer for the first purchase of the buyer. When a buyer purchases for second or more properties this value is 6%. Some investors do not pay this if they are planning to exit the investment at some point, and then this fee passes onto the next buyer (one-time payment, applies to resales)

Infrastructure contribution and utility connections fee: ranges between 1000 STG and 3000 STG (only the first owner of the property pays this fee, and in some cases, if stated by the contract the vendor covers these costs)

Home Ownership Tax is currently 3 Turkish Liras per sqm (recurring payment)

If the owner receives rental yields from their property, they should pay a capital gains tax of 10% of their revenues. The buyer should check with their local tax authorities if they will be subject to double-taxation in their country of residence. (recurring payment)

PS: Capital Gains Tax (Stopaj) is payable to the Tax Office by the Vendor although this can always be varied by the parties by an express clause in the Contract of Sale.

Inheritance Taxes

Different taxes are applicable where the transfer is made by way of a donation (gift);

To a child from parents with 0.2%

To spouse with 0.4%

To a grandchild with 0.4%

Plus withholding tax is payable to the Finance Department.

Selling your property

First-time sellers can exert their right to not pay any Capital Gains Tax. From the second sale onward by the same person is subject to Capital Gains Tax of around 3% of the valuation of the property.

If the person chooses to work with an agent the commission is payable by the seller.

Other closing costs

The two other main costs are the legal fees which can range between 1000 STG and 5000 STG depending on the services chosen by the buyer.

The other is the furnishing. Most vendors offer furniture packages. Even when the property is advertised as unfurnished; it usually comes with fitted tiles, kitchen cabinets, fitted sink, toilet and bathroom, AC infrastructure. However, the buyer must always double-check what is included in their purchase price with the vendor and have it in the written form attached to the sales contract.

The buyer might also get into a maintenance agreement for the common areas of the complex the property might be sharing, and these maintenance fees are payable monthly or annually. An agreed amount of deposit per the agreement might be paid at the time of entering into this contract usually at the time of Key-Handover. Full recurring costs should be discussed with the developer and/or their representatives.

Soylem Coli          

Broker Assistant, Avertiss Real Estate

March 11, 2021. Kyrenia, North Cyprus.