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