Over the past few years, property in Northern Cyprus has become one of the most interesting real estate investment vehicles in the region. The cost of housing in the primary market increases by 10% annually, and in the secondary market, by 5% or more. The reason why Northern Cyprus is popular among those who purchase property in Turkey is the affordable prices for houses and apartments in this location, while the quality of construction is high and tax rates are low. In this article, we will look at the expenses that await buyers of property in Northern Cyprus.
Content:
- Taxation when purchasing property in Northern Cyprus
- Real estate prices in Northern Cyprus
- Annual property tax
- Is it worth buying a home in Northern Cyprus?
- Start your property journey in Northern Cyprus today!
Taxation when purchasing property in Northern Cyprus
When buying a house or apartment, you must pay several flat tax levies. These are value added tax (VAT), stamp duty, and title deed transfer tax.
VAT
When buying an off-plan property, you must additionally pay VAT of 5% of the residential unit value set by the developer. You are exempt from this tax in case of a secondary market property.
Contract registration fee
Contract registration fee, or stamp duty, amounts to 0.5% of the price of the purchased residential unit, specified in the sales contract. This amount is payable to the tax office at the time of concluding the contract. It will not be executed unless you pay the duty. The contract must be registered with the Land Registry no later than 21 days from the transaction date.
Title deed transfer tax
When buying a property, residents of Northern Cyprus and Turkey pay a title deed transfer tax of 6% of the value. If the buyer has the citizenship of Northern Cyprus and it’s their first-time purchase of a property on the island, then the tax is halved to 3%.
All overseas buyers pay this tax, which amounts to 12% of the property value. In this case, half the tax is paid at the time of registering the sales contract, while the other half is paid after the new owner obtains the title deed.
Real estate prices in Northern Cyprus
For tax purposes, prices for real estate in Northern Cyprus are established by licensed agencies, regardless of whether it is a new property or an old one. Therefore, it is impossible to save on taxes by agreeing with the seller to indicate a lower property value in the contract. Even the prices submitted by developers are subject to reverification by officials.
Annual property tax
The annual property ownership tax in Northern Cyprus is very low. It is based on the number of square metres in a residential unit. It can be paid in two instalments per year (in spring and autumn).
The tax is calculated in Turkish Lira (TL). The tax amount per 1 m² of living space up to 120 m² is TL 1.85 (slightly less than USD 0.1). In other words, the annual tax on a 100 m² property will be TL 185 (around USD 9.5).
The tax on property over 120 m² is calculated using a different formula: for the first 120 m², the owner also pays TL 1.85, while the square metres above this are taxed at TL 2 (USD 0.1) per 1 m².
For example, the tax on a 150 m² living space will amount to TL 282 (USD 14.5) per year: 120 m² are calculated at a tax rate of TL 1.85, and the remaining 30 m², at TL 2.
Is it worth buying a home in Northern Cyprus?
So, is it worth buying a property in Northern Cyprus? It depends on what the buyer has in mind, and only they can answer this question. As you can see from this article, there are big advantages to acquiring real estate in the Turkish part of the island of Cyprus. The cost of maintaining a house or apartment is very low compared to many other countries, and property prices rise every year. Moreover, many off-plan residential properties offer convenient instalment payment plans, significant discounts, and great deals. Just give the market a thorough research, and you will see that there are many excellent offers in this resort state.
After you buy a property, you can use, or even upgrade, the house increasing its price. This is one of the popular investment strategies in Northern Cyprus.
Another good tool is to rent out the house to tourists through Airbnb or Booking. This will help you enjoy passive income from your rental business without having to worry about whether you can easily find a tenant. It is an island visited by thousands of tourists every season. You will definitely find a tenant both in summer and in winter.
In addition to the potential benefits of reselling or renting out the house, Northern Cyprus has an advantageous climate and location. Whether you are looking for a summer home for a seaside holiday with your family, a place to move to permanent residence and work remotely, or somewhere to live in retirement in the future, Northern Cyprus is an ideal option. On this island, it is easy to find a quiet and beautiful location where you can lead a comfortable and safe life with beautiful views of the Mediterranean Sea. Children will be able to attend local schools and universities. Degrees from Northern Cyprus institutions are recognized by all EU countries and in the future will allow their holders to look for work anywhere in Europe.
It is important to note that Northern Cyprus is one of the world’s easiest countries to obtain a residence permit. The state grants residency to those who buy property, while there are no restrictions on the cadastral value, and the minimum real estate area is only 17 m². It is also possible to obtain a residence permit in the country as a property tenant. This type is called a High-Income Residence Permit and requires the applicant to earn at least three minimum wages per month and have at least USD 8,000 in a bank account.
Northern Cyprus is a beautiful seaside area with sandy coastlines, historical sites, and picturesque sceneries. The country is known for its excellent cuisine, entertainment venues, tourist attractions, and natural landmarks.
Start your property journey in Northern Cyprus today!
Feel free to contact our experts if you are thinking about moving to Northern Cyprus or investing in Turkish real estate in this location. Learn all about the buying process and taxes when purchasing a house or apartment in Northern Cyprus by phone or online chat.