| There are four main taxes involved in any | | | | either the assessed value or the sale price. |
| property sale and purchase transaction These | | | | Please note that some vendors require the VAT |
| taxes are: | | | | to be paid on the actual sale value of the |
| | | | property as stated in the Contract of Sale on |
| * The transfer fee which is payable to Land | | | | the date that possession of the property is |
| Registry Office | | | | delivered to the purchaser. You should check |
| | | | the terms of your contract of sale on this |
| * The capital gains tax which is payable to | | | | point. |
| the Tax Office | | | | |
| | | | * CAPITAL GAINS TAX - As stated above, this |
| * The VAT (KDV) which is payable to the Tax | | | | is usally paid by the Vendor. The amount |
| Office or to the vendor | | | | payable depends on whether the vendor is a |
| | | | professional vendor a private individual as |
| * The Stamp Duty which is payable to the Tax | | | | defined under VAT above. If the vendor is a |
| Office | | | | professional vendor, the rate will be 6.25%. |
| | | | Otherwise, the rate will be 3.5% |
| Different taxes apply to gifts of property | | | | |
| for no consideration and transfers of | | | | * STAMP DUTY - This is 0.5% of the contract |
| property between family members. | | | | price provided this is paid within 1 month of |
| | | | the date of the contract. If it is not paid |
| As a general rule, capital gains tax is | | | | within this time, the rate increases in |
| payable by the vendor and the transfer fee | | | | stages until after 6 months it becomes 1.5%. |
| and Stamp Duty is payable by the purchaser, | | | | |
| although this can always be varied by the | | | | FREQUENTLY ASKED QUESTIONS |
| parties by an express clause in the Contract | | | | |
| of Sale. | | | | Vat For Property Transactions |
| | | | |
| The payment of VAT depends on two factors: | | | | Will I have to pay VAT on my property |
| | | | purchase? |
| * Whether or not the transaction is subject | | | | |
| to VAT. This depends on whether the vendor is | | | | In determining whether you will be liable to |
| deemed by the Tax Office to be a | | | | pay VAT on your property purchase, you need |
| "professional vendor" (i.e. whether the | | | | to establish the following: |
| transaction is of a commercial nature or for | | | | |
| profit). If the vendor is deemed to be a | | | | * Whether the vendor is a professional vendor |
| professional vendor, the transaction will be | | | | as defined above. |
| subject to VAT. If the vendor is a private | | | | |
| individual, the transaction will not be | | | | * Whether your contract requires you to pay |
| subject to VAT. | | | | the VAT. |
| | | | |
| * Terms of the Contract of Sale. If the | | | | Where the contract does not expressly mention |
| transaction is subject to VAT, who will | | | | VAT, it is our opinion that the purchase |
| actually pay the VAT depends on the terms of | | | | price shall be deemed to be inclusive of VAT. |
| the Contract of Sale i.e. whether or not the | | | | |
| sale price is stated to be inclusive or | | | | CAPITAL GAINS TAX |
| exclusive of VAT. | | | | |
| | | | Will I have to pay Capital Gains Tax on my |
| Taxes are generally paid on transfer of | | | | purchase? |
| title. The percentages listed below are | | | | |
| calculated as follows: the Transfer Fee is | | | | Generally, no. Capital Gains Tax is usually |
| generally paid as a percentage of the | | | | paid by the Vendor, unless otherwise |
| assessed value of the property which is | | | | stipulated in your contract. |
| carried out just before transfer of title | | | | |
| takes place. The Land Registry assesses the | | | | Will I have to pay Capital Gains Tax on the |
| property in the state it is in at the date of | | | | sale of my property? If so, how much will |
| the assessment i.e. if there is a new | | | | this be? |
| construction on the property, this will be | | | | |
| included in the assessment of the value of | | | | This depends on whether you are a private |
| the property. The VAT, Capital Gains and the | | | | individual or a professional vendor (as |
| Stamp Duty are based on either the assessed | | | | defined above): |
| value or the contract value, whichever is the | | | | |
| highest. Under new regulations, the Tax | | | | Every private individual has a once in a |
| Office now requires a copy of the contract of | | | | lifetime tax free sale option (for a house |
| sale to be presented to it prior to transfer | | | | and land not exceeding approximately 1 |
| of title. | | | | donum). If you use this use this option, you |
| | | | will not be liable to Capital Gains Tax on |
| The percentages levied for each of the three | | | | that sale. On all subsequent sales, Capital |
| types of tax are shown below: | | | | Gains Tax will be payable at 3.5%, provided |
| | | | you do not sell more than 3 properties in one |
| * TRANSFER FEE - The transfer fee is 6%. | | | | year, making you a professional vendor. |
| However, every person has a once in a | | | | |
| lifetime option to reduce this to 3%. If a | | | | For professional vendors, there are no tax |
| purchaser elects to use this option on the | | | | exemption rights. Capital Gains Tax is |
| purchase, he or she will only pay 3%. Once | | | | payable on every sale at a rate of 6.25%. |
| this option right has been used, the transfer | | | | |
| fee payable on all future purchases by that | | | | What if I sell my property before taking |
| person will be 6%. | | | | title? Will I still have to pay Capital Gains |
| | | | Tax? |
| * VAT FOR PROPERTY TRANSACTIONS - 5% of | | | | |