Why Invest in Cyprus
The North Cyprus Property Boom
Having been off the international map for 30 years, North Cyprus has returned to the fore-front of the scene because of the North Cyprus property boom; the UN’s attempt to reunify the island in 2004 with the Annan Plan Referendum began a minor but significant boom in North Cyprus property investment, and since then smart investors have been showing growing interest in the market. The island did not reunify at that time, but North Cyprus hit the press, and people started to realize there was a whole different side to Aphrodite’s island.
The 2004 Annan Plan Referendum
The Annan plan referendum kick started a growth in tourism and investment for Property in North Cyprus. And until then, the southern part of Cyprus was far better known by British holiday makers and investors. But the trigger of the referendum led to a relaxation of standards and sanctions from the international community, so that the natural beauty of the island and the cultural benefits of the island could flourish.
Why Investment in North Cyprus Property is Happening Now
North Cyprus, which is generally agreed to be the more beautiful of the two regions, now poses a real opportunity for investment enthusiasts. It still remains an undiscovered secret, retaining natural beauty and Cypriot character, with beautiful sea and mountain views stretching along the coast. Although there is something of a property boom in progress in the North it is still highly undeveloped, offering prices approximately 50% lower than their equivalents in the south.
The North Cyprus Property Boom is slowly gathering momentum. What is getting shrewd investors excited, though, is that reunification - which, though it failed in 2004, is now looking almost certain - is predicted to open a burgeoning property market, so that properties in North Cyprus will rocket in value and become some of the most sought after in the world.
Indeed, property in North Cyprus is calculated at providing returns of up to 30% or more in one year, from plans to completion in the Kyrenia district, with healthy rental returns. The new up and coming area is East of Kyrenia - Esentepe, Bacheli and Tatlisu, as examples - where the island’s first golf course is constructed and a large marina is in its planning stages. All the projects in this area are located close to the sea, with stunning mountain backdrops, and - best of all - are valued at a fraction of the price of more developed Mediterranean countries.
Some Helpful Facts -
Q What is the official language in TRNC?
A The official language in TRNC is Turkish but English is widely spoken.
Q What is the time difference with UK?
A North Cyprus is two hours ahead of UK GMT time.
Q What side of the road do you drive in North Cyprus?
A You drive on the left hand side like in the UK.
Q Is TRNC recognized elsewhere in the world?
A The TRNC has an embassy in Ankara and Consulates in Mersin and Istanbul, offices of Representatives in London, Washington, New York, Brussels, Pakistan and Abu Dhabis. Honorary Representatives in Italy, Germany, Canada, South Africa and Finland. Also in TRNC there is a Turkish embassy, British High Commission and German Consulate.
Q How do I travel to North Cyprus?
A There are no direct flights to Northern Cyprus. All flights are through mainland Turkey. You do not have to leave the plane as a general rule and remain on board for 45 minutes in one of the airports in Turkey (Antalya, Emir, Istanbul) The flight all together is approx 6 hours. You can travel to TRNC from London (Heathrow, Gatwick and Stanstead) Manchester, Glasgow and Dublin. There is also a big selection of ferries from Turkey, the fastest is 2 hours. The new alternative route is to travel via Larnaca in Southern Cyprus; no visa is required as Southern Cyprus is now part of the EU. You may hire a car and drive across the border purchasing insurance on the Turkish side. Once you cross the border the Turkish side will give you a three month entry visa which enables you to stay in TRNC.
Q Can I bring pets and personal possessions to Northern Cyprus?
A There are several companies that offer this service. The price depends on the cubic meter capacity. You can bring all pets into the country. Your pets have to have a rabies injection and a UK vet certificate stating that the animal has no infectious diseases. This is then presented to the Ministry of Agriculture. The quarantine period is 28 days; you MUST look after your own pet during quarantine.
Q Can I drive with my UK license?
A You are able to drive with a UK license for three months, after that you will need to apply for a permanent TRNC driving license.
Q How long can a British Citizen stay in North Cyprus?
A When arriving in North Cyprus you automatically receive a three month visa. You can get an extension or if you decide to permanently settle on the island you will need to get a residency permit. We can guide you in the right direction to get one.
Q Are there any restrictions on buying property in Northern Cyprus for foreign persons?
A Yes, there are restrictions. The land in North Cyprus is measured in donums. A foreign person can only buy 1 donum of land (1,338 square meters or approx 14,000sq feet).
Guide to Buying Costs
VAT For Property Transactions
5% of either the assessed value or the sale price. Please note that some vendors require the VAT to be paid on the actual sale value of the property as stated in the Contract of Sale on the date that possession of the property is delivered to the purchaser. You should check the terms of your contract of sale on this point.
Capital Gains Tax
As stated above, this is usually paid by the Vendor. The amount payable depends on whether the vendor is a professional vendor a private individual as defined under VAT above. If the vendor is a professional vendor, the rate will be 6.25%. Otherwise, the rate will be 3.5%
Stamp Duty
This is 0.5% of the contract price provided this is paid within 1 month of the date of the contract. If it is not paid within this time, the rate increases in stages until after 6 months it becomes 1.5%.
The Transfer Fee is generally paid as a percentage of the assessed value of the property which is carried out just before transfer of title takes place. The Land Registry assesses the property in the state it is in at the date of the assessment i.e. if there is a new construction on the property, this will be included in the assessment of the value of the property. The VAT, Capital Gains and the Stamp Duty are based on either the assessed value or the contract value, whichever is the highest. Under new regulations, the Tax Office now requires a copy of the contract of sale to be presented to it prior to transfer of title.
Frequently Asked Questions
Vat on transactions for property in North Cyprus
Will I have to pay VAT on my property purchase?
In determining whether you will be liable to pay VAT on your property purchase, you need to establish the following:
• Whether the vendor is a professional vendor, as defined in the section on VAT.
• Whether your contract requires you to pay the VAT. Where the contract does not expressly mention VAT, it is our opinion that the purchase price shall be deemed to be inclusive of VAT.
Will I have to pay Capital Gains Tax on my purchase?
Generally, no. Capital Gains Tax is usually paid by the Vendor, unless otherwise stipulated in your contract.
Will I have to pay Capital Gains Tax on the sale of my property? If so, how much will this be?
This depends on whether you are a private inpidual or a professional vendor (as defined above):
Every private inpidual has a once in a lifetime tax free sale option (for a house and land not exceeding approximately 1 donum). If this option is taken, then Capital Gains Tax will not be eligible on that sale. On all subsequent sales, Capital Gains Tax will be payable at 3.5%, provided you do not sell more than 3 properties in one year, making you a professional vendor.
For professional vendors, there are no tax exemption rights. Capital Gains Tax is payable on every sale at a rate of 6.25%.
What if I sell my property before taking title? Will I still have to pay Capital Gains Tax?
Capital Gains Tax is not payable if you sell the property before taking title by doing an assignment of contract.
