Issues to watch out for:
Lawyers acting for both buyer and seller, therefore not independent
Lack of planning permission or building permits
Fluctuations in currency and interest rates affecting prices/charges
Payment plans or fees not being included in the initial contract
Ability to obtain certificates of final completion (deeds cannot be issued without this)
Ability to obtain title deeds
What redress is there if problems are identified
With all property purchases, seek your own independent legal advice.
Lawyers
First meetings with lawyers are normally free, so it’s worth having a meeting before selecting a property, to make sure you’re happy with the legalities of owning a home in Northern Cyprus. Provide your lawyer with full information about the property plus details of any informal or verbal agreements you’ve made with the vendor regarding price, payment schedule and included items. Your lawyer can also give you advice about setting up a business, residency, taxation, or drawing up a new will. Legal firms increasingly offer multi-lingual services, advice and property contracts in English, Turkish, Russian and German. Their websites will give you more information.
Power of Attorney (POA)
Unless you speak Turkish and live in North Cyprus full time, you need a lawyer. Setting up a limited POA with a certified legal advisor in the TRNC is a free and very quick process. It’s ONLY for the process of buying property and is without risk to yourself. Proof of identify required is your passport plus recent bank or utility bill. You can do this during a visit giving you the option to still buy after you leave. A POA enables the lawyer to sign documents on your behalf if you’re away from Northern Cyprus for periods of time. Giving this POA is usually without charge, and enables all the important buying processes from the contract registration, to putting the deeds into your name, to be done without you having to return.
Number of properties
Non-TRNC citizens are allowed to hold one property of up to 5 donums, or just over 1.5 acres. Husband and wife qualify for one property each, as the restriction is one property per person. Multiple properties can be purchased by setting up a company or TRNC trust, or finding a trusted nominee to hold title for you. Properties can be registered in the name of an individual or a company. Setting up a TRNC company to hold the property title may have tax benefits. Consult a lawyer for advice.
Taxes
There are four main taxes involved in any property sale and purchase transaction. These taxes are:
Capital Gains Tax - (Stopaj). Payable to the Tax Office by the seller unless varied by an express clause in the Contract of Sale. The Tax Office requires a copy of the Contract of Sale prior to transfer of title. Currently 4% of the assessed value of the property.
VA.T. – Payable to the Tax Office by the seller if they’re deemed by the Tax Office to be a ‘Professional Vendor’ (i.e. whether the transaction is of a commercial nature or for profit). The Tax Office requires a copy of the Contract of Sale presented prior to transfer of title. Currently 5% of the Contract value.
Transfer Fee - Payable to the Land Registry Office just before transfer of title takes place. Usually paid by the buyer and is currently 3% of the assessed value of the property for locals and 12% for foreigners.
Stamp Duty - Payable to the Tax Office by the buyer unless varied by an express clause in the Contract of Sale. All Contracts of Sale must be registered at the District Lands Office within 21 days of being signed. Stamp Duty of 0.5% of the contract value must be paid before registration can take place.
Obtaining permission to purchase
The obtaining of permission to purchase is protracted and can take anywhere from 1 month to one year, but this doesn’t mean you’ll be unable to take possession. Once contracts have been exchanged and registered at the Land Registry, you’ll acquire beneficial interest and contractual rights of the property. Not only can you take possession, but your rights on the property are protected at the Land Registry Office, therefore no third party can buy, sell, or claim your property until permission is granted and deeds are transferred.
Can I sell my property before I obtain my purchase permission?
Yes - if you’ve negotiated with the seller to insert a clause allowing you to sell the property before taking title. Your lawyer would then prepare an assignment of contract to be signed between you, the seller, and the new buyer, assigning all of your rights and obligations under the contract to the new buyer.
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