1) Main Taxes on the purchase of real estate by foreigners in TRNC
Stamp duty– the tax, which is paid while registering the contact of sale to the Tax Office. The tax should be paid and the contract should be registered within 21 days from the date of signing of the contract of sale. The fee is 0.5% from the sale price stated in the contract of sale
6% Registration Tax – The amount payable in accordance with the evaluation carried out by the Land Registry and Tax Office. The fee is calculated from the sale price stated in the contract of sale.
VAT– The amount payable to the Vendor is 5% of the value of the purchased property, stated in the contract of sale.
Transformer charge (TRAFO)– the amount depends on the purchased object. It includes the provision of electricity and water communications.
Annual property tax – It is calculated, basing on the rate of 1.25 Turkish Lira per 1 sq.m. of the covered area of the property. It is payable to the municipality.
2) Costs and Taxes payable during Transfer of Title Deeds
3 main taxes involved in any property sale transaction (different taxes apply to gifts of property). These taxes are:
– The transfer fee which is payable to Land Registry Office
– The capital gains tax which is payable to the Tax Office
– The VAT which is payable to the Vendor
The Capital Gains is usually payable by the vendor and the transfer fee is usually payable by the purchaser (although this can be varied by the parties in the Contract of Sale). VAT, however, is subject to the terms of the Contract of Sale agreed between the parties (i.e. whether or not the sale price includes or excludes VAT).
3) Inheritance Tax
In order to determine Inheritance tax a complicated calculation must be made. Every case should be considered on its own merit.
Inheritance tax exempt movable or immovable properties:
- a) Properties and income attached to those properties that transferred to trust.
- b) Bank deposits (savings or current accounts) only if joint accounts where each one has authority to withdraw separately.
- c) Wages, salaries if will be inherited
- d) Private goods like jewelries
Land and building valuations are obtained from Land registry Office Bank Loans, creditors and other liabilities can be deducted from assets if proved by official evidence
Tax is %1 on net assets (assets less proven liabilities)