How to Buy Property in Northern Cyprus Formal Processes and Taxes

How to Buy Property in Northern Cyprus Formal Processes and Taxes

How to Buy Property in Northern Cyprus Formal Processes and Taxes

Buying a new house is an exciting experience. The feelings of accomplishment, hope and expectation are almost overwhelming. However, if can be an experience that is fraught with plenty of unexpected outcomes. Therefore, it is critical that potential property owners need to have an idea about the processes involved in acquiring a property. We are going to walk you through the formal processes and taxes required to buy a property in Northern Cyprus.  This will involve providing you with useful information for dealing with contract signing, hiring a lawyer and paying necessary taxes.

Regardless of whether you are planning to buy a holiday home, a residential home or an investment property, it is important that you learn about the formal processes and taxes required to buy a property in Northern Cyprus. In Northern Cyprus, the purchase process generally begins with the presentation of the purchase contract. Sometimes, it can be difficult for the potential buyer to fully understand the language of the contract. This is especially true if he/she does not possess any formal legal training. At this point, it is critical that you engage the services of a legal adviser to protect your rights and interests.

How to safeguard your interests: legal adviser’s responsibilities.

How to Buy Property in Northern Cyprus Formal Processes and TaxesGenerally, it is not difficult for a foreigner to buy property in Northern Cyprus. However, working with a Northern Cyprus based legal adviser tends to simplify and speedup the process. There are several websites where legal firms in Northern Cyprus can be found and engaged. These sites tend to provide information about a solicitor’s experience, qualifications and other related information. It is also possible to ask a local company to contact a legal advocate on your behalf. For instance, Spartan Investments only works with the most qualified legal professionals in Northern Cyprus and often recommends some of these legal professionals to its customers.

Choosing the right legal advocate can be a game changer. He can become the guarantor of a safe, transparent and good purchase transaction. He can represent the buyer and obtain specific documents and permissions on behalf of the buyer when the latter is absent. He can work on the basis of power of attorney which can be arranged for clients who do not want to come to Northern Cyprus at the time of purchase. However, it is advisable to be physically present during the contract signing event.

The legal advocate is responsible for preparing the Contract of Sale, providing assistance during the contract signing, registering the contract with the proper authorities, blocking any third parties’ actions and claims on the property, etc. After the contract is signed, the lawyer applies to Ministry of Internal Affairs for permission to purchase the property and to process the title deed transfer for the new owner. The whole procedure takes from six to eighteen months. It is concluded when the ministry grants permission for the title deed transfer to occur. There are rarely any cases where the ministry fails to grant permission for such applications. Instances where the ministry rejects an application occur when the applicant has a criminal record in his home country. Generally, the lawyer’s service charge is about £1200 (€1500) with the full amount to be paid at the time of the contract signing.

Contract of Sale

How to Buy Property in Northern Cyprus Formal Processes and TaxesThe contract of sale serves to define the rights and obligations of the parties involved in the sale, the terms and conditions of the sale and to confirm the sale. It is prepared, presented and signed by the parties involved in the sale. Generally, the potential buyer’s legal advocate is present during the event. The contract is provided and signed in triplicate with the buyer, his lawyer and the seller keeping copies of the contract. It may be in multiple languages; Turkish being the language of the seller and the buyer’s native language. All copies of the contract have equal legal validity.

Contract of Sale includes information about buyer and seller, all the rights of new owner, such as living, lending or selling the property, and information about the property, such as the property’s registration number and address. Conditions of the key transfers are also specified in the contract. The contract also specifies the payment schedule and the deposit amount per period, which are usually between £1000-5000 (€1200-6300), depending on the price of the property. It also specifies whether the utilities are already installed or not and whether the property needs partial reconstruction or renovation. Parties negotiate and specify responsibility and terms, and give detailed description of work to be done in an Addendum. The contract of sale has to specify that property is not pledged to or claimed by third parties.

After all the relevant parties have signed the contract of sale, it has to be to be registered at the District Lands Office and Tax Office within 21 day of the contract signing. The registration of the contract ties the property to the new owner until he receives permission to purchase from the Ministry of Internal Affairs. At this point, the property cannot be resold, transferred to a third party and no claims can be placed on the property. The contract registration fee is €15. Stamp Duty is paid at the time of registration of the contract at the Tax Office. The current rate is 0.5% of the property price. Upon the registration of your contract of sale, you can apply for a residence permit to dwell in Northern Cyprus. You can also read our article about Visas and Residency Permit in Northern Cyprus for more detailed information.

As soon as the ministry grants permission to purchase, the Title Deed is transferred to the name of the new owner. This is when the buyer is obliged to pay taxes relating to the acquired property. These taxes are:

  • Value Added Tax (VAT) – 5% of the property price
  • Transfer Fee – 3% of the property price
  • Annual tax imposed on property is calculated as 1 TL for 1 m2. It means that a 220 m2 three-bedrooms villa with the private pool will cost you only 220 TL or €70 annually.