Real estate taxes in North Cyprus + example of calculation of the payment amount!
As in other countries, real estate in North Cyprus is subject to additional taxes at purchase. There are few related payments, but to ensure smooth preparation of documents, all of them have to be paid.
In this article, we will particularly explain all taxes related to the purchase of real estate, as well as give an example of their calculation.
Investing in overseas real estate is no longer an unrealizable dream. Today, any foreigner can invest in real estate of many countries. North Cyprus is the most preferred option for those who want to increase investments, because the state is experiencing a real construction boom!
Besides, medicine, tourism and education are actively developing in the island country. These spheres attract mass flows of tourists, so according to analysts, the real estate purchased for the purpose of subsequent renting out will easily find the tenant and pay off in 7 to 10 years. Owners of real estate often use their apartments only during holidays, and at all other times rent it out, which is very profitable.
In addition, the purchase of housing for permanent residence is widespread. In North Cyprus, a large diaspora of immigrants from the CIS countries has already settled.
A potential investor needs to be aware of all the nuances of the transaction before making it. This will help to avoid unplanned expenses and prepare the entire package of documents. At the moment, there are 4 main taxes, which apply to all types of real estate in the TRNC, regardless of its price and location. Taxes in North Cyprus are governed by the legislation of the Turkish Republic of Northern Cyprus.
Each option is considered in detail as shown below:
It is a fee for the registration of a purchase and sale transaction with public authorities. In North Cyprus, the stamp duty is 0.5% of the real estate price. The investor must pay this fee after signing the purchase-and-sale contract, within 21 days of registration of documents in the Land Committee.
An important nuance in purchasing real estate in North Cyprus is titles, Title Deeds. In other words, title means full ownership of real estate and land. It is necessary to pay 6% of the housing price in order to transfer title from seller to buyer.
However, a customer purchasing real estate in North Cyprus for the first time can count on a one-time discount of 50%! Thus, the fee for the transfer of title will be reduced to 3%.
It should be noted that such a discount can be used only once in a lifetime; therefore, it is necessary to weigh all the pros and cons deciding to request such a preference from the state.
If you go to the notary public, take a package of documents with you, especially a title document.
It is applied in all countries of the European Union. Most developers do not include VAT in the final fee, and many customers are unpleasantly surprised to learn that they need to pay an extra 5% of the total housing price.
Value added tax must be paid 90 days before the keys are received.
It is a fee for connecting the villa or apartment to the main communications. These include water, electricity, internet, satellite TV and, in some cases, central heating.
Applies to new buildings (registration of a new owner), and to secondary housing (re-registration of connection to the new owner).
The amount charged is not fixed, and its size may vary from $1,700- $2,500 depending on the type of real estate. Naturally, the amount charged for the villa will cost less than for an apartment in the residential complex. The average size of the transformation fee is $2,200.
As an example, we give the calculation of additional payments that arise at purchase of the apartment costing $150,000.
Before signing the purchase-and-sale contract, the customer must pay for:
- Stamp duty- 0.5% (750$).
- Notary services- ($80).
- Services of a professional lawyer engaged in the preparation of documents- ($2,000).
During the registration of the contract with the Land Committee:
- Commission for registration of land patent- 3% including discount ($4500).
After handing over the keys to the new owner:
- Transformation fee- ($2,200).
- VAT- 5% ($7,500).
Purchase of real estate in North Cyprus is subject to additional payments; the amount is about 10% of the total value of the real estate. This is quite normal, considering that in the resort countries of Europe, such payments can be up to 30%!
For more information on the real estate purchase procedure and all related costs, please refer to this article.
After paying all taxes and fees, you can be considered as a full owner of the real estate. During the process of registration of the transaction, the buyer should only have all the necessary documents available and timely pay all fees. Delaying mandatory payments is severely punished by North Cyprus law.