Buyers Guide To Purchasing Property In North Cyprus
If you are considering purchasing a property in North Cyprus, it is important to take the correct legal advice and to appoint a lawyer to guide you through the complete transaction and to ensure that all your interests are fully protected. The first step is usually an informal initial meeting with your lawyer to discuss the purchase. This stage may also involve giving your lawyer a “Power of Attorney” for to ensure that they can act on your behalf to sign documents relating to all matters as you will probably be away from North Cyprus for long periods of time.
Your lawyer would then check all of the paperwork and legal documents relating to the property including the title deeds and site plan. For new build property, the building permit and final approval (as applicable) and report back to you. Providing the documents and paperwork are in order, the Contract of Sale would then be prepared by your lawyer. This would be sent to you for your consideration and approval. It is important to ensure that the Contract covers all of the terms which have been agreed between the parties. Once the Contract of Sale has been approved and signed then your lawyer will arrange for the Stamp Duty to be paid based on the Contract of Sale (0.5% of the Contract price) and for the Contract to be registered at the Land Registry. Registration of the Contract is very important as it enables your lawyer to confirm with the Land Registry that the property is free from encumbrances and once the Contract is registered, this will protect from the land being sold to a third party or mortgaged without your knowledge and consent.
If your property is an existing property, completion will then take place according to the terms and dates agreed on your Contract of Sale. Your lawyer will handle the completion process to ensure that keys are collected and that all utility and other bills are up to date when you take possession of the property and will ensure that the sale proceeds are only released once all completion processes have been concluded. If your property is an off-plan property then the stage payments will be made by you in accordance with the terms of the Contract of Sale via your lawyer. Once the property is complete, your lawyer will again assist you and guide you with the final process.
The next stage in the process is for your lawyer to make an application to the Council of Ministers for your permission to purchase a property. Whilst processing your purchase permit application, the Council of Ministers will take searches from the land registry, the military and the immigration authorities and provided that these are positive then your permission will be granted by the Authorities. The permission process can take a considerable time to complete; the current estimation is around one year. However, this will not prevent you from moving into the property or leasing the property or possibly even selling the property.
Once your purchase permission has been granted, your lawyer will notify you and provide you with instructions for the transfer of title. Your lawyer will fill out all of the necessary land registry forms and the taxes due on transfer of title will then be paid and the title deeds will be registered in your name.
There are four main taxes involved in any property transaction. These taxes are as follows:
The Transfer Fee (Devir Harçları) which is payable to the Land Registry.
This is usually paid by the purchaser. The Transfer Fee is 6% of the price of the property. However, every person has a once in a lifetime option to reduce this to 3%. If a purchaser elects to use this option on the purchase, he or she will only pay 3%. Once this option right has been used, the Transfer Fee payable on all future purchases by that person will be 6%. On most property purchases, there is also a small local municipality tax which is 1% of the Transfer Fee amount.
The Capital Gains Tax (Stopaj) which is payable to the TRNC Tax Office.
This is usually paid by the vendor. The amount payable depends on whether the vendor is a Professional Vendor or a private individual. If the vendor is a Professional Vendor, the rate will be 4%. If the vendor is a private individual, the rate will be 2.8%. This is a percentage of the price of the property NOT of the gain made.
The VAT (KDV) which is payable to the Tax Office or to the vendor.
VAT is usually paid by the purchaser to the vendor on the date on which possession of the property is delivered to the purchaser in return for an official VAT invoice (known as a ‘fatura’ in Turkish) which is then produced to the Tax Office on transfer of title as proof that the VAT has been paid. In some cases, it is payable on transfer of title. VAT is not applicable to all transactions only in cases where the vendor is a Professional Vendor. Where it is applicable, it is usually paid by the purchaser.
The Stamp Duty (Pul Parası) which is payable to the Tax Office.
This is paid by the purchaser and is paid on signing of the Contract of Sale as outlined above in order for the Contract of Sale to be registered at the Land Registry.
It is important that anyone purchasing property in the TRNC makes a will in the TRNC to cover their estate here. Any will prepared outside of the TRNC may not cover your estate in TRNC or even if it does, the probate procedure may be sustantially more complicated. Therefore, it is advisable to make a separate will in the TRNC. An important point that should be noted is that if you die intestate (i.e. without leaving a Will) your spouse will not automatically inherit your estate, if there are surviving children (in which case a surviving spouse will only receive a 1/6th share and the remaining 5/6th will go to any surviving children) or other specified relatives. Making a will ensures that your assets will pass to the people of your choice.
This Document has been prepared for Dream Homes Network by :
Naomi Mehmet LL.B. (Hons) Advocate
Naomi Mehmet & Partners
Muharremoglu Apt No 1, Sariyer Sokak, Girne, 99300, Mersin 10 Turkey
Tel: (009) 0392 816 0440
Mob: (009) 0533 8640995, (009) 0542 8820440
Fax: (009) 0392 815 0702