PURCHASING AN IMMOVABLE PROPERTY IN THE TRNC

 On the way of getting your dream home, being not familiar with the laws and the legal procedure, you can confront some challenges. Buying a piece property in the TRNC can be a puzzling and long process. The reason why purchasing property in Northern Cyprus can be complicated has historical reasons.  You can read “Background history of property titles” at Insight & News to get more information. In this article, we want to focus on the current process of buying a property in the TRNC.

Before buying an immovable property in Northern Cyprus, we recommend you to make a search at the District Lands Office to determine who the legal owner is and if there are any mortgages or other impediments on the property. In the case of buying a piece of property ‘off plan’, it is essential to be verify that the developer has a permission to build.

Find an independent lawyer in the TRNC

During this process of purchasing immovable property, we recommend that you discuss the entire process with your lawyer.  You must be sure that your lawyer is independent and is registered with the Cyprus Turkish Bar Association. Your lawyer will conduct a search at the appropriate District Lands Office to check for any encumbrances which may hinder your investment and / or cause issues and to ensure that property is registered in the name of the party whom you are purchasing from.

If you do not intend to stay in Northern Cyprus during the whole purchase process or simply you do not want to be involved in the paperwork, you can give your lawyer a “Power of Attorney” (POA) to make sure that they can act on your behalf to sign documents on all matters.

The Contract of Sale as a key element of purchasing property in Northern Cyprus

A well-prepared contract is one of the essential measures that would protect your interests while purchasing a property.

The Contract of Sale is a legally binding agreement between the vendor and the purchaser concerning the terms of purchase or/and transfer of an immovable property.

The Contract of Sale will be your legal ground in case of any conflict in relation to which you decide to go to Court.

Hence, the contract should describe any terms with which the parties have agreed: i.e., a full description of the property, rights and obligation of the parties, warranties, terms of termination, payment details, etc..   It should be underlined that only a qualified and independent lawyer can help you to prepare the contract, ensuring that it covers all of the terms which have been agreed by the parties.

Why register the Contract of Sale at the District Lands Office?

Another significant element of purchasing a property in Northern Cyprus is the registration of the contract at the District Lands Office. The registration takes place after the contract has been signed. The Registered Contract of Sale will protect the purchaser from any inappropriate behaviour of the vendor, such as selling the property to a third party or mortgaging it without purchaser’s knowledge and consent.

According to the relevant law, foreigners who wish to buy a property in the TRNC must apply to the Ministry of Interior for Permission to Purchase (PTP). The PTP gives the purchaser the right to become a legal owner of the property.  During the process, the Ministry of Interior will consult the land registry, the army, and the immigration authorities. Usually, this process takes about 6-12 months after the application.  However, this will not prevent you from taking possession of the property or even selling it.

Once the purchaser receives the Permission to Purchase, the process of the transfer of title will begin. At this stage, your lawyer fills out necessary forms and pays taxes due to the transfer of title deed. After that, the title deed will be transferred and registered in the name of the purchaser.

There are four taxes that the vendor or/and purchaser must pay:

1. Stamp duty.

   Generally, the stamp duty is paid by the purchaser unless the parties agree on different terms in the Contract of Sale. The stamp duty is payable to the Tax Office at the rate of 0.5% of the sale price, before the registration of the Contract of Sale at the District Land Office.

2. Capital gains tax (Stopaj tax).

   This tax is payable by the vendor unless parties agree on different terms in the Contract of Sale. The rate of tax varies depending on whether the vendor a Professional Vendor (company or individuals who have already sold more than three properties) or an individual. If the vendor is a Professional, the rate of tax is 4%, and if the vendor is a private individual, the rate of tax is 2.8%.

3. VAT (KDV).

   The VAT is payable by the purchaser unless parties agree on different terms in the Contract of Sale. The VAT is applicable only in the case where the vendor is a Professional. The tax is payable to the Tax Office. The rate is 5% of the Contract price, payable upon possession of the property. However, the parties can agree to postpone the payment of the VAT till registration and transfer of the title deed.

4. Transfer Tax.

   This tax is payable by the purchaser. The Transfer Fee is payable to Land District Office. There is also a small local municipality tax, which is 1% of the Transfer Fee amount (0,03%).

On 27 January 2023, the TRNC Legislative Assembly passed amendments to the law on transfer tax. In accordance with the amendments, foreigners, except  Turkish citizens, are now required to pay 12% transfer tax in order to get title deeds transferred into their names. This payment will be regardless of whether it is the first purchase or not. READ MORE

It should be noted that such rules have adopted to protect and ensure the rights of the purchaser. One should be warned that the efforts to reach an agreement and register the title deed without the assistance of a lawyer who is experienced in the process carries risks. We highly recommend you use legal support in order to put your mind at ease, while all the paperwork and legal documents are being managed by your lawyer.

Last but not least, one should note the importance of making a Will in the TRNC. We have witnessed problems with Wills that were made outside the TRNC, which referred to properties in Northern Cyprus. Further to laws of the TRNC, only British people have the right to dispose the entirety of their assets by a Will, while other nationals, including the Turkish Cypriots, are only entitled a certain portion of their property by Will (the ‘disposable portion’), and the rest (the ‘statutory portion’) is distributed in accordance with the law.  It is important to ask for the advice and help of your lawyer in making a Will to ensure that your assets will go to the persons you choose.

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