Capital gains tax-i dont understand

billyboy1


Joined: 01/06/2009
Posts: 590

Message Posted:
15/12/2009 14:05

can some explain to me about capital gains tax, in terms that i can understand please...



i sold a property in cyprus back in 2006 and now someone else is buying it, and apparently it is still in my name (why???)



and my solicitor is on about capital gains tax?????



i dont understand any of it.....help

caulkhead


Joined: 03/01/2009
Posts: 149

Message Posted:
15/12/2009 14:24

Unfortunately, Capital Gains Tax kicks in when the 'beneficial' ownership changes. Whilst the 'legal' ownership may not yet have changed, for CGT purposes it will be treated as having been sold.

Aslan


Joined: 23/06/2008
Posts: 757

Message Posted:
15/12/2009 14:24

TRNC capital gains tax (CGT) as far as I am aware is a percentage from the sale price only, unlike the UK where you pay the capital gains tax on the difference between the original purchase price and the sale price.



i.e in the TRNC you but a property for 60,000GBP and then sell it for 100,000GBP you pay CGT on the 100,000GBP.

in the UK you buy a property for 60,000GBP and then sell it for 100,000GBP you pay CGT on the difference or the capital gained in this case 40,000GBP.



The percent of capital gains tax in the TRNC is payable at the rate of 6.25% for a professional vendor otherwise it is 3.5%



For more details go to: http://www.nmplegal.com/pdf/GUIDE%20TO%20TAXES%20FOR%20PROPERTY%20TRANSACTIONS.pdf

Molly


Joined: 30/08/2008
Posts: 299

Message Posted:
15/12/2009 14:43

It would appear that you didn't get the title deed in your name at any stage. If you had done so you would have a one-off option not to pay Capital Gains /Stoppage Tax. As it is, the title deed presumably is in the name of the original Vendor who will eventually transfer it to the new purchaser.



If this is the case, the property was presumably resold for a higher price. However, the original Vendor will only pay Capital Gains/Stoppage tax for the same value that he sold it to you. If you sold it for a higher amount, it is your responsibility to pay 6.25% on the difference.

No1Doyen


Joined: 04/07/2008
Posts: 16617

Message Posted:
15/12/2009 14:47

Aslan - message 3. Unless of course the property is your main residence then you don't pay any CGT.

Aslan


Joined: 23/06/2008
Posts: 757

Message Posted:
15/12/2009 14:54

6.25% if you are a professional vendor, in this case when you purchased the property from a developer (professional) vendor he or she should have paid 6.25%, however when you came to sell you would pay 3.5%. In your case I think the developer has not paid his CGT to enable transfer, this method has been used by vendors in the past to blackmail purchasers into parting with more money i.e if the purchaser does not pay the vendors CGT then you will not have title transferred, although illegal as it is the vendors duty to pay the CGT, some developers have got away with it.



So if your developer has not paid 6.25%, you have not paid 3.5% then the title will still be in the developers name and it;s time to pay for a lawyer to investigate for you.

Aslan


Joined: 23/06/2008
Posts: 757

Message Posted:
15/12/2009 14:55

No 1, absolutely correct, in this case I think the developer has not paid and thus title has never been transfered

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
15/12/2009 14:55

I am beginning to understand the mentality of our guests

We have no solicitors in Cyprus but oh yes we have.

We have no Capital Gains Tax in Cyprus but oh yes we have.



So let the game begin. If you use wrong names then it is natural that you also assume wrong things and then you all get confused.



OK, you all know that we only have advocates here and no solicitors but you prefer to call them solicitors and then ask why these solicitors do not carry the same duties as those in UK.



"Stopaj" is an advance tax to be accounted for later as part of your income tax. I pay 4% Stopaj when I import goods and at the end of the year when I work out my income tax, I deduct the 4% I already paid them. Theoretically, if your business did not earn anything, you can ask the 4% back but you must be prepared for a very good examination of your books.

ismet

Aslan


Joined: 23/06/2008
Posts: 757

Message Posted:
15/12/2009 15:15

So when a developer calculates the cost of building a property he would in theory add the 6.25% to the cost and pass that cost into the sale price and have no reason to ask the purchaser to pay the tax on his behalf for title release.

Harold2555



Joined: 19/04/2008
Posts: 1139

Message Posted:
15/12/2009 15:18

Ismet Bey



a very helpful post, the mis naming of many things leads to confusion. However can you just confirm that the tax due on the sale of a property is correctly called Stopaj, and that it is paid on the sale proceeds of a sale. If not then your post has only confused me more.





Harold

Aslan


Joined: 23/06/2008
Posts: 757

Message Posted:
15/12/2009 15:28

I not sure what has rattled the cage of MR Elko, but as far as I am aware the TRNC has an attorney general, high court judges (two of which work for the EU in Brussels), Solicitors/Advocate/Lawyers) and court houses. The TRNC has a police force to protect the rights of it's citizens based on the laws of the state and the KKTC constitution.



And as far as i am aware there are accountants who work on behalf of individuals and pay from the clients returns any taxes due.



So do we or do we not Mr Elko have the above representation in the TRNC?

Molly


Joined: 30/08/2008
Posts: 299

Message Posted:
15/12/2009 17:14

Message 5 Not sure what your message is. This does not make in any difference in the TRNC. Stoppage tax has to be paid before transfer can proceed.



Message 6 - Perhaps the original purchaser did not get their permission or may be they didn't want to pay their taxes!!



Message 10 - Stoppage tax is calculated on the Contract Price.

cooper


Joined: 23/10/2007
Posts: 3386

Message Posted:
15/12/2009 17:35

Surely if its completed whilst the current discount is still in force you will only have to pay 4.25% opposed to 6.25%



Cooper

wanderer


Joined: 05/02/2009
Posts: 1653

Message Posted:
15/12/2009 17:43

Capital Gains Tax is 37.5% of the value of the contract times by 25% less the already paid stopaj

The contract if in sterling must be converted to the applicable TL rate at the date of the contract i.e if the contract was 2007 and the exchange rate 2.7 to the £ then bad news

example

£100,000 by 2.7 (tl) =270,000

TL 270,000 by 37.5% =101,250 tl

TL 101,250 by 25%= 25,312.50 minus stopaj already paid



Stopaj

£100,000 by 2.7 (tl) =270,000 by 4%=10,800

Harold2555



Joined: 19/04/2008
Posts: 1139

Message Posted:
15/12/2009 17:49

Wanderer



all is now clear



Thank you

billyboy1


Joined: 01/06/2009
Posts: 590

Message Posted:
15/12/2009 18:52

OK



Thanks so far



a bit more detail



the property was completed in 2005, i inherited it from my father, and sold it in 2006....according to my advocate, it is in my name...



i sold it to mr a, he then sold it to mr b, and now mr b wants to sell it to mr c......



as far as i am aware when i sold the property, i seem to remember something about not paying tax on one property, an exemption, i had 3 properties that i sold.....

the property in question was the most expensive....



also, as far as i am aware, when i sold the property, i sold the property, the advocate got the money, took out all that needed to be taken out and i was given what was left.....



i do not have any relevant paperwork at mo from back in 2006



and i used the same advocate then and now

billyboy1


Joined: 01/06/2009
Posts: 590

Message Posted:
15/12/2009 18:54

also, my father did not buy the property, he owned land on which he made a deal with a developer, for the developer to build apartments and my father in exchange would receive some apartments

wanderer


Joined: 05/02/2009
Posts: 1653

Message Posted:
15/12/2009 19:28

billyboy

Ask you advocate for all the figures relating to the transaction and the workings out as in my example in post 14

But not just for CGT or stopaj but the whole lot no excuses from them they are not to bright on the maths front they are not accountants and accountants are not that good either

From what I've seen they try to hide a lot in the exchange rates so be careful

Then when you have all the information get an independent second opinion of a solicitor and accountant

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
15/12/2009 19:34

Here we go again.

msg. 10, Harold,

It is called Stopaj and is based on the sale price. It is 6.25% for the professional seller (i.e. more than 3 properties in a calendar year) and I think 3.5% for the non professional seller with a once in a life time exempt from Stopaj. Theoretically if the developer makes a loss, he should be able to get it back but I doubt if it works like that in practice. The same goes for 10% Stopaj on rental incomes. I have not heard of anybody getting it back but I did once got the agreement of the tax office to exempt my sister from it under threat of court action from me. The possibility of exemption is in the law but nobody knew about it.

Msg. 11, Aslan,

Be careful, if I escape from my cage I may come and bite you There are 8 High Court Judges and they sit as Court of Appeal, High Administrative Court and also Constitutional Court. The Presidents of the three District Courts and the Assizes court all act as reserves. The President of Nicosia District

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
15/12/2009 19:37

Court had to step in when I went to the Constitutional Court. I tied three of tem down at the Court of Appeal. The Chief Justice was my cousin, so he refused to take part. So only 4 judges were left for the Constitutional Court but 5 were needed, so the reserve stepped in. So I know from personal experience. None of the High Court Judges have any duties within EU. However a recent Chief Justice of TRNC served at European Court of Human Rights ECHR as representing Turkey, not TRNC.

ismet

Aslan


Joined: 23/06/2008
Posts: 757

Message Posted:
15/12/2009 21:14

Ismet, again confusion, whether it be the name for lawyers or the number of high court judges, both the chief justices of the TRNC mentioned still serve the EU as TRNC citizens and not under any political shield of the Turkish Republic, please do not think that these fine people both born and bred TRNC Vatandash/citizens would represent any country other than their homeland. That would be an insult to their integrity and common goal of putting the case of the TRNC before the EU member states and courts of law.

elko2



Joined: 24/07/2007
Posts: 4400

Message Posted:
15/12/2009 22:01

Aslan,

I am not trying to be funny at all but honestly I did not understand your last message (msg.21). What are you talking about? Can you make it simple so that even I can understand it please? If possible first give me the facts and then your comments.

Perhaps some of the members who did understand it will explain it to me. Thank you.

ismet

Molly


Joined: 30/08/2008
Posts: 299

Message Posted:
16/12/2009 11:03

BillyBoy1 - you need to ask your lawyer. It would have made sense to exercise your option on this sale as it was the most expensive. However, you need to find out if your purchaser Mr A. ever got the title deed in his name. If he did not, then you would not have exercised your option, nor would you have paid any stoppage tax. But the situation has worsened for the current purchaser because of the number of times the property has been sold on.



Cooper - as it turns out it is in BillyBoy's name. Had that not been the case, there would still be 6.25% to pay.



Aslan - it seems you have a different agenda and it doesn't help this thread!