BUYING PROPERTY IN THE TURKISH REPUBLIC OF NORTHERN CYPRUS (TRNC)

Buying property in the TRNC can be complicated and stressful for those unfamiliar with the laws and legal process.

PURCHASE PROCEDURE

TAXES RELATED TO PROPERTY PURCHASE

There are four main taxes involved in any property purchase and sale:

VAT

The tax office requires a copy of the purchase contract before the transfer of ownership. VAT is then calculated based on the contract value of the property and is currently 5%.

The payment of VAT depends on whether the transaction is subject to VAT or not.

This depends on whether the seller (the person who has title to the property and not just contractual ownership or possession of the property) is considered a “professional seller” by the tax office (i.e. whether the transaction is commercial in nature or for profit). If the seller is deemed to be a professional seller, the transaction will not be subject to VAT.

Transfer Fee

Transfer fees, payable to the Land Registry immediately before the transfer of ownership, are normally paid by the buyer and are 12% of the assessed property value.

The Land Registry will examine the contract of sale before the transfer of ownership to estimate the value of the property and calculate the transfer fee based on the assessed value.

Stamp Duty

Stamp duty payable to the Tax Office and calculated based on the contract value of the property. Generally, stamp duty is payable by the buyer, although the parties can change this at any time by an express clause in the contract of sale.

All contracts of sale must be registered with the District Land Registry within 21 days of signing and it is now mandatory to pay the 0.5% stamp duty before registration can take place.

HOW CAN A LAWYER HELP?

At the initial meeting with the lawyer, they will obtain the details of the property you wish to purchase and look at any informal agreements you have made with the seller regarding the purchase price, payment plan and any items included in the sale. They will explain the process you need to follow, including the taxes and fees you will need to pay, and may be involved in any investigations on your behalf to ensure transactions are carried out safely and efficiently. Power of Attorney may also be obtained from you at this stage to ensure the lawyer can sign documents on your behalf if you are absent from Northern Cyprus for an extended period of time.

Due to new legislation, a lawyer will also need to establish your identity before acting on your behalf. The following identification documents are required:

Full passport/full driving license

Current bank statement/utility bill (not older than 3 months)

Please also note that further documentation may be required in accordance with current anti-money laundering regulations.

The general principles of the lawyer's services are as follows:

a) The lawyer will conduct a land registry search at the relevant land registry office to confirm that the seller is the registered owner of the property and that the property is free of liens, charges or encumbrances. He will analyse the documents and verify that the relevant building permits, construction permits and approvals have been obtained.

b) To protect your rights and interests, the lawyer will prepare a sales contract tailored to your specific requirements, detailing the details of the sale, completion dates, payment schedule and any fixtures and fittings, responsibilities of both parties, and late payment penalties and indemnity clauses. The contract will be presented to you and the seller for review and if both parties are satisfied with the contents, the contract will be signed.

c) Once the lawyer is satisfied with the results of the search and the contract has been signed and exchanged, he will proceed to register the sales contract at the district land registry office. It is mandatory to register all contracts for the purchase of immovable property at the District Land Registry within 21 days of signing the contract and to pay the stamp duty of 0.5% of the property value before registration can take place. Registering the contract ensures that you are protected from the sale or transfer of the property to a third party and that both the buyer and seller can expect a proper transaction based on the law....

When considering the total taxation for the buyer, 17.5% of the purchase price follows as an additional cost.