Buying property in Northern Cyprus is a profitable investment
Becoming the owner of your own property in Northern Cyprus is not at all difficult if you know the main legislative points. Ideally, if you are accompanied in this process by a qualified specialist working in a registered real estate agency. In this article, we will point out the main points that you should pay attention to if you decide to purchase real estate.
An important step before buying a property
Once you have looked at several options and settled on the one you like (considering such factors as the area, the availability of infrastructure, and, of course, the cost), you should obviously seek the advice of an independent lawyer who will check this object for lack incumberances, (debt and or restrictions applicable, if any). The object must be “clean” – ie. not mortgaged to a bank or other lender, have an individual title deed and have proper electricity and water supply. Also, a foreigner does not have the right to purchase a property that is within a 300 meter radius of any military zones or bases. A foreigner can buy real estate near military bases, and even register a contract, but transferring the title / ownership to his name cannot be done – unfortunately, such is the law of the land. Therefore, in order to save yourself from unnecessary problems, consider an object located no closer than 500 meters from military zones – just to be safe .
Our company specialists are well acquainted and ready to advise you on the letter of the law in this respect. We take pains to ensure all the properties we offer have no incumberances and are not located near military bases.
The lawyer's services
Firstly, once you have chosen, you will need to make a deposit for the object you like, the deposit amount varies from between 1,000 pounds up to 5% of the price of the property, the deposit amount is set by the seller. In case of making a deposit, your property will be taken off the market and you will have 1-2 months to pay or commence the appropriate payment plan.
A lawyer will help draw up a contract, agree on all the necessary conditions with the developer, if it is a new property, or with a private person, if it is a resale property. The contract will indicate the value of the property, the terms of the purchase – the payment plan. As a rule, many developers provide either an interest-free installment plan for a period of 24 to 60 months, or a loan for a period of up to 10 years at a rate of 5 to 10% per annum, or a combination of the first and second. Of course, some sellers want to receive the entire amount at once. There are many real estate objects in Northern Cyprus, there are also many conditions for the acquisition, our goal is to find you an property at an accptable price and the optimal payment plan for you.
Once the terms of the contract have been agreed upon and it has been signed by both parties, it must be registered with the Land Registry (TAPU) within 21 days. At the time of registration of the contract, it is necessary to pay a registration tax in the amount of 0.5% of the value of the property specified in the contract. Typically, your lawyer will facilitate this for you.
The cost of a lawyer for checks your property for “cleanliness”, drawing up a contract, registering it with TAPU, applying to the Ministry of Internal Affairs for permission to purchase real estate and transfer ownership in your name, ranges from 1200 to 1500 pounds. Some lawyers may charge a much higher price for their package of services, but we advise you to use on the above figures as a guidline. Some developers will offer a standard contract free of charge (or, at least included in the price). We advise that you get an independant lawyer to check it over in any case.
Payment of taxes on the acquisition of real estate
In addition to the registration tax that we already mentioned (0.5%), there are 2 more taxes that you need to be aware of.
VAT in the amount of 5% – is paid to the developer when purchasing a new property. The developer, in turn, pays his VAT to the state. This tax must be paid either upon receipt of the keys or upon the transfer of ownership (receipt of title). It depends on the builder.
Property tax
Tax upon acquisition of ownership – that is, when the title is transferred to your name – 3% or 6%. Now we will explain to you why 2 digits are given.
In general, the title transfer tax is 6%, but once in a lifetime a foreigner is given the right to pay a reduced tax of 3%. Those who plan to purchase only 1 property always enjoy this right and pay 3%. If a person plans to first purchase a cheaper object, and then a more expensive one, then he will use this right when buying a second object.
Example: You decide to buy a studio for £50,000 and pay a 6% title transfer tax, which is £3,000. A year later (or no matter how long), you decide to sell the studio and purchase a villa for £500,000. Since the second property is much more expensive, it is much more reasonable now to use the discount tax and pay 3%. Your tax will be £15,000. By the way, the sale of the first property is not taxed. Periodically, so-called “amnesties” are held, when the value of the tax drops to 1%, and many of our clients have been able to use this right.
That’s it for real estate taxes. The total amount is 8.5% of the value of the property (if we take into account the 3% tax on title transfer).
Annual property tax
The annual property tax in Northern Cyprus is very low, ranging from currently 1.8 liras per square meter for properties up to 200 sq.m., and a little over 2 liras per square meter for larger areas. Thus the apartment is 100 sq.m. will cost you 180 lire per year (less than $10).
Permission from the Council of Ministers for the acquisition of real estate
In order to obtain permission from the Council of Ministers to purchase real estate and transfer the title to your name, you need to take a police clearance certificate from the police department of your city in your country of residence. This certificate must be translated into Turkish, notarized, as well as at the Turkish Embassy. We recommend that you take this certificate at the place of residence, and translate and certify it here, in the TRNC.
As you can see, you only need a passport to complete the transaction. A certificate of non-conviction can be taken later and handed over/sent to a lawyer. This certificate is valid for 6 months.
A foreign citizen only has the right to purchase 1 property, apartment, villa or land.
Husband and wife are also 1 family, or “household”, and by law can only purchase 1 property. Very often, when a husband and wife have different surnames, they each receive titles in their own name and, thus, can acquire 2 objects. A foreign citizen has the right to purchase more than 1 property subject to opening a company (becoming a legal entity). It would be more correct to say that a foreign citizen without opening a company can acquire 10 real estate objects, register a contract and no one will be able to take away this property after registering a company, but only 1 object can get ownership or title in his name.
Knowing your rights and the laws of the country regarding the acquisition of real estate in the TRNC will save you a lot of nerves and avoid possible disappointments, in any case, the specialists of our company will accompany you at all stages of the transaction and guarantee you only positive emotions from your stay in Northern Cyprus.
