Buying Property in Northern Cyprus – Tax Liabilities

From a taxation view there are 2 main ways to own properties in Northern Cyprus. The 1st is to own the North Cyprus Property as a foreign resident within the letter North Cypriot law. This means that your main country of residence, such as the England for example, will be the country that you declare your Northern Cyprus property as an asset for tax purposes on income from rental and any Capital Gains Tax due upon sale of the property in Northern Cyprus The second way is to own it as a Northern Cyprus Resident, meaning that you apply for taxation residence of Northern Cyprus.

Planning your tax payments will be down to what you intend to do with your property in Northern Cyprus. If your intention is to retire in Northern Cyprus and after you have achieved your residency status, you'll only have to pay five percent tax on pension’s income and there will be no inheritance taxation for your willed successors to pay on your North Cyprus property.

If you are intending to gain an income from renting your Northern Cyprus property then tax residency of Northern Cyprus will be very beneficial for you too. The TRNC actively support property investment in tourism, so depending upon your needs you may be eligible for taxation incentives, as well as being exempted from inheritance tax payments.

GGT will be charge upon sale of your property regardless of whether you are a North Cypriot resident or UK resident. Creative tax planning before you make a North Cyprus property purchase can significantly reduce your CGT liability you will have to pay upon selling the property. An example of this being when you buy property one way to avoid a hefty CGT bill is to ‘gift’ a share of the property to your Wife. This will enable you to use a larger amount of your personal CGT allowance to offset any further gain.

There are many other ways to minimise your CGT, including the use of one of the most powerful tax reduction techniques available to English residents - taper relief. We advise that you seek consultancy from a certified tax advisor to calculate the best set of tax minimising strategies for you.