Buying Process
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Our experienced multi-lingual team is here to make your life easier and the route to finding a property in Northern Cyprus painless and fun. Register through our property search system which will give us information about your requirements we can then send you all the details on the properties that suit you. Alternatively you can call us directly or fill in our Kyrenia office contact form below.
Legal
Guide To Purchasing Property In the Turkish Republic of Northern Cyprus
Under the laws of the Turkish Republic of Northern Cyprus (TRNC) non-TRNC citizens are entitled to take title to only one property up to a maximum area of 1 donum per household. For the purposes of this law, husband and wife count as one household. Before the title deeds to the property can be registered in your name, you will need to have permission from the TRNC Council of Ministers. This is explained in more detail below. If you wish to take title to more than 1 property, or a property over 1 donum in area, we can give you advice on using trustees or setting up a TRNC company to hold the title to the property for you.
The conveyancing procedure followed by, is designed to ensure that your interests are protected as far as possible throughout the whole transaction. The first step will be an initial meeting with you to obtain information about the property you have chosen and any informal agreements you have made with the vendor regarding price, payment schedule and included items. This stage may also involve taking a power of attorney from you to ensure that we can act on your behalf to sign documents if you are away from Northern Cyprus for long periods of time.
We will then prepare a Contract of Sale to safeguard your interests. The Contract of Sale will include all important terms such as plot number, plot size, price, payment schedule, completion date with penalty clauses for late completion and all floor plans and specifications will be attached to the contract to ensure that the vendor is bound to carry out the construction work in accordance with these. The contract will be sent to both the vendor and the purchaser for review. When both parties are happy the contract will be signed. You will be given the option to pay the stamp duty at this point. Under new regulations, the Tax Office are requesting to see a copy of the contract of sale prior to transfer of title with all stamp duty paid up. Stamp duty is payable at 0.5% of the contract price if paid within 1 month of the contract date. If it is not paid within this time, it increases until it becomes 1.5% if paid after 6 months. You will have the option to pay upfront or pay on transfer of title and pay a higher rate.
We will next conduct the necessary land registry searches on your behalf to ensure that the vendor is the registered freehold owner of the land and that there are no mortgages/charges, injunctions or other encumbrances on the property. We will also check that the building permission for the construction has been obtained. We will then make the application to the Council of Ministers for your permission to purchase. The permission process can take a long time to complete, the current estimation is around two years. However, this will not prevent you from moving into the property or leasing the property or possibly even selling the property - as standard practice, we always try to negotiate with the vendor the insertion of a clause into the contract allowing you to sell the property before taking title to the property. We can also provide advice on other ways to secure your interest until you receive the title deeds, for example by registering a charge over the 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, the permission will be granted. In the unlikely event that your application for permission is refused, you will be able to nominate any other person to take title to the property on your behalf and hold the property on trust for you. We can assist you with the drafting of the necessary trust deeds.
Once your purchase permission has been granted, we will notify you and then fill out all of the necessary land registry valuation forms for the valuation of the property. It is usually at this point that taxes will be payable. The taxes are calculated based on the land registry valuation and are currently at the following rates:
- Land Registry Transfer Fee - 6% (however, every purchaser has a once in a lifetime option to reduce this fee from 6% to 3%. At the time of transfer, we will ask you whether you wish to use your option and if you do, you will only pay 6%).
- VAT - 5%
- Stamp Duty 1.5% (if this has not already been paid - see above)
The taxes will be paid and the title deeds will be registered in your name. If you have left us with power of attorney, all of this can be dealt with without you being required to travel to the TRNC. We will then collect and keep the title deeds for you until you are ready to collect them.
BUYING PROPERTY IN THE TRNC - FREQUENTLY ASKED QUESTIONS -
I am not a citizen of the TRNC, but I want to purchase two properties in the TRNC? How can I do this?
You can sign the contract of sale for the two properties in your own name, however, you can only apply for purchase permission for and take title to one property. Therefore, you will need to find a nominee (this person should be a friend or relative or someone you know and trust) to take title to the property and hold the property on trust for you or you will need to set up a TRNC company. Please ask us for more detailed advice on trusts and companies.
Can my spouse and I purchase one property each?
No. Husband and wife are counted as one household and the current property restrictions are one property per household.
How long will the purchase permission process take and what does it involve?
This process can take some time - current estimations are around two years. The process involves searches being take from the Land Registry, the Immigration and the Military.
Do I need to wait for my purchase permission before I can move into my property?
No. Once your property is complete, you will be able to take possession of your property and move in.
Can I sell my property before I obtain my purchase permission?
This depends on the terms of your contract of sale. As standard practice at, we always try to negotiate with the vendor to insert a clause allowing you to sell the property before taking title. We would then simply prepare an assignment of contract to be signed between you, the vendor and the new purchasers assigning all of your rights and obligations under the contract to the new purchasers. Selling before taking title also has tax advantages as taxes are only payable when a transfer of title takes place.
What taxes are payable on the purchase and when are these payable?
Taxes are usually payable right at the end of the transaction after your purchase permit has been granted and the title deeds are being transferred into your name. However, some vendors require VAT to be paid on the sale price at the date of delivery of possession of the property.
The rates of tax are as follows:
- Land Registry Transfer Fee - 6%. However, every person has a once in a lifetime exemption to reduce this tax to 3%. If you decide to use your option right, you will pay 3%.
- VAT - 5%
There is also a new regulation governing stamp duty on property purchases. The Tax Office is now requiring the contract of sale to be presented prior to transfer for title and for stamp duty to be paid. Stamp duty is payable at 0.5% of the contract price if paid within 1 month of the contract date. If it is not paid within this time, it increases until after 6 months, it becomes 1.5% of the contract price.
For more detailed information on taxes, please ask us for a copy of our guide to the taxes payable on property transactions.
Making an Offer
Once you have found a suitable property we will put your offer to the seller verbally. Any offer in TRNC is subject to contract being signed.
You will be required to produce a holding deposit to take the property off the market which is refundable within a two week period should you decide against proceeding. Holding deposits vary from £500-£1500, any major credit card is taken or alternatively you may also use an English check book.
Contracts
Appoint a Turkish Cypriot lawyer who will then make checks on the property/land to ascertain that the relevant building permits are in place, verify the properties shape and boundaries search with the land registry to make sure the property/land being purchased is clear from any influence that may affect property value.
Once the property/land has gone through all the relevant checks made by your lawyer and is shown to be free of any restrictions a contract will then be drawn up between yourselves and the vendor. A time frame of purchase will then be agreed between both parties and contracts will then be signed.
Your chosen lawyer will then apply to the Ministry of Interior for a purchase permit, this make take between 6 -12 months. Once a permit has been issued then you are able to register your name with the land registry as the legal owner.
Taxes
Guide to Taxes For Property Transactions
There are four main taxes involved in any property sale and purchase transaction These taxes are:
- The transfer fee which is payable to Land Registry Office
- The capital gains tax which is payable to the Tax Office
- The VAT (KDV) which is payable to the Tax Office or to the vendor
- The Stamp Duty which is payable to the Tax Office
Different taxes apply to gifts of property for no consideration and transfers of property between family members.
As a general rule, capital gains tax is payable by the vendor and the transfer fee and Stamp Duty is payable by the purchaser, although this can always be varied by the parties by an express clause in the Contract of Sale.
The payment of VAT depends on two factors:
Whether or not the transaction is subject to VAT. This depends on whether the vendor is deemed by the Tax Office to be a 'professional vendor' (i.e. whether the transaction is of a commercial nature or for profit). If the vendor is deemed to be a professional vendor, the transaction will be subject to VAT. If the vendor is a private inpidual, the transaction will not be subject to VAT.
Terms of the Contract of Sale. If the transaction is subject to VAT, who will actually pay the VAT depends on the terms of the Contract of Sale i.e. whether or not the sale price is stated to be inclusive or exclusive of VAT.
Taxes are generally paid on transfer of title. The percentages listed below are calculated as follows: the Transfer Fee is generally paid as a percentage of the assessed value of the property which is carried out just before transfer of title takes place. The Land Registry assesses the property in the state it is in at the date of the assessment i.e. if there is a new construction on the property, this will be included in the assessment of the value of the property. The VAT, Capital Gains and the Stamp Duty are based on either the assessed value or the contract value, whichever is the highest. Under new regulations, the Tax Office now requires a copy of the contract of sale to be presented to it prior to transfer of title.
The percentages levied for each of the three types of tax are shown below:
TRANSFER FEE - The transfer fee is 6%. 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%.
VAT FOR PROPERTY TRANSACTIONS - 5% of either the assessed value or the sale price. Please note that some vendors require the VAT to be paid on the actual sale value of the property as stated in the Contract of Sale on the date that possession of the property is delivered to the purchaser. You should check the terms of your contract of sale on this point.
CAPITAL GAINS TAX - As stated above, this is usally paid by the Vendor. The amount payable depends on whether the vendor is a professional vendor a private inpidual as defined under VAT above. If the vendor is a professional vendor, the rate will be 6.25%. Otherwise, the rate will be 3.5%
STAMP DUTY - This is 0.5% of the contract price provided this is paid within 1 month of the date of the contract. If it is not paid within this time, the rate increases in stages until after 6 months it becomes 1.5%.
FREQUENTLY ASKED QUESTIONS
Vat For Property Transactions
Will I have to pay VAT on my property purchase?
In determining whether you will be liable to pay VAT on your property purchase, you need to establish the following:
- whether the vendor is a professional vendor as defined above
- whether your contract requires you to pay the VAT. Where the contract does not expressly mention VAT, it is our opinion that the purchase price shall be deemed to be inclusive of VAT.
Capital Gains Tax
Will I have to pay Capital Gains Tax on my purchase?
Generally, no. Capital Gains Tax is usally paid by the Vendor, unless otherwise stipulated in your contract.
Will I have to pay Capital Gains Tax on the sale of my property? If so, how much will this be?
This depends on whether you are a private inpidual or a professional vendor (as defined above):
Every private inpidual has a once in a lifetime tax free sale option (for a house and land not exceeding approximately 1 donum). If you use this use this option, you will not be liable to Capital Gains Tax on that sale. On all subsequent sales, Capital Gains Tax will be payable at 3.5%, provided you do not sell more than 3 properties in one year, making you a professional vendor.
For professional vendors, there are no tax exemption rights. Capital Gains Tax is payable on every sale at a rate of 6.25%.
What if I sell my property before taking title? Will I still have to pay Capital Gains Tax?
Capital Gains Tax is not payable if you sell the property before taking title by doing an assignment of contract.
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