Taxes in Northern Cyprus are strictly regulated by the law of the Turkish Republic of Northern Cyprus (TRNC).
When purchasing property in Northern Cyprus, you have to pay the following taxes in stages:
1. Stamp Duty.
Stamp Duty (the state fee for the stamp) is a mandatory tax, payable to the Tax office for the registration of the Contract of Sale in the Land registry. This fee is to be paid within 21 days from the date of signing of the Contract of Sale. The amount of the fee is 0,5% of the value of the acquired property object, specified in the contract. The payment is made at the stage of signing of the contract.
The amount of VAT is 5% of the value of the property specified in the contract of sale and is payable within 3 months before the keys are received.
3. Transformer charge.
The amount of the transformer fee varies depending of the purchased object, including the provision of electricity and water communications as well as the telephone lines (from £1,500 to £2,250). It is payable within 3 months before the keys are received.
4. Transfer fee.
The transfer fee has to be paid to the local Immovable Property Commission before transferring the title to the buyer's name. The amount of the fee is 6% of the property acquired value and is calculated on the basis of the estimated value. Currently, a buyer has a one-time right to reduce the transformer fee to 3% (if they buy a property for the first time).
Now, let's consider the taxes on the maintenance of the acquired property.
1. Annual property tax.
The amount of the tax depends on the area of the acquired property and is calculated based on the rate of 1,25TL (0,2 euros) per each sq. m. of the covered area of the property annually (area of the open terraces is not included).
You have to pay this fee after obtaining the title deed, once a year in the municipality at the place of residence.
2. Annual tax on cleanliness.
The tax on maintaining cleanliness includes cleaning roads, garbage disposal, processing plants from insects. The fee is a fixed amount of 100TL (regardless of the property type and the residential complex).
Additional information on taxes:
- Income tax on rented properties.
If you lease your apartment, you have to pay the tax at the rate of 10% of the rental fee.
- Capital Gains Tax
This tax is analogous to the Income Tax and, as a rule, is payable by the vendor of the property at the moment of selling their property object. The amount payable depends on whether it is a professional vendor (a property development company, for example) or a private individual.
If the vendor is a professional, the tax rate will be 4,7% of the property value.
Nevertheless, all the private individuals have a single tax-free sale right for a house or land not exceeding 1 donum (14,400 sq. feet or about 13,38 acres) without olive or carob trees growing on the territory. If the area exceeds 1 donum in size, the single tax-free sale option can be used only for the first 1 donum, and Capital Gains Tax will be payable on the remainder of the land at 2,8%. If there are olive or carob trees on the territory, the Capital Gains Tax will be payable at the rate of 2,8% on all the area of the land except the area of the building.