Purchasing real estate in Northern Cyprus is a unique and somewhat distinct experience compared to many other countries. The historical division of the island in 1974 has led to specific legal requirements and safeguards in place to protect property buyers. In this blog, we’ll walk you through the purchase process, emphasizing the role of legal professionals, and shed light on the additional costs you might encounter as of March 2023.
The Essential Role of a Lawyer
In Northern Cyprus, acquiring property is a mandatory process that involves the active participation of a legal professional. This is designed to safeguard your interests as a buyer. The first step in this process is to seek comprehensive legal advice from a lawyer who specializes in property transactions in Northern Cyprus.
After obtaining legal counsel, you grant power of attorney to your lawyer, empowering them to act on your behalf in all matters related to the property purchase. Interestingly, this process is quite straightforward and only requires your passport for verification.
Your appointed lawyer takes on a multitude of responsibilities, including drafting the purchase contract, managing the purchase application, conducting a thorough legal examination of the property, and registering the property in your name. With the power of attorney in place, you can engage your lawyer’s services from abroad, ensuring a seamless property acquisition process. This means that even if your payment plan is ongoing, once the property is partially paid for and officially registered by your lawyer, it belongs to you.
Understanding the Additional Costs
It’s crucial to be aware of the additional costs associated with purchasing real estate in Northern Cyprus. As of March 2023, these expenses include:
1. Stamp Duty (0.5% of the contract price):
Payable uponthe registration of the purchase contract.
2. Value-Added Tax (5% of the contract price):
This tax is typically payable upon completion, although some developers may include it upfront in the purchase price.
3. Property Acquisition Tax (12% of the contract price):
This tax is divided into two parts – 6% is due at the registration of the stamped purchase contract at the District Land Registry Office, and the remaining 6% is payable upon the transfer of the title deed to the buyer’s name. It’s important to note that the “Title Deed Transfer” with the 6% tax is optional, so it’s wise to discuss your options with your lawyer. Additionally, buying property through a trust is another option that might help you save on taxes, so be sure to discuss this with your legal advisor.
4. Lawyer’s Consultation Fees (Approximately £2,000):
This covers the cost of legal counsel throughout the process, ensuring that your interests are protected.
5. Transformer Fee (Approximately £3,000):
This is a one-time payment for water and electricity connection, typically due after the completion of the property purchase.
6. Property Tax (Approximately 2 TL per m2 per year):
For instance, a 100 sqm apartment would incur around 200 TL (approximately 10 EUR) in property tax annually.
7. Rental Income Tax (13% of rental income):
If you plan to rent out your property, you may need to pay 13% of the rental income in taxes. Some large developers mightcover this tax when booking a rental service, which typically amounts to 30% of the income.
Mastering the Real Estate Purchase Process in NorthernCyprus
The real estate purchase process in Northern Cyprus is a well-structured and regulated procedure that prioritizes the interests of property buyers. With the guidance of a qualified lawyerand an understanding of the associated costs, you can navigate this unique process with confidence, ensuring a smooth and secure acquisition of your dream property in this beautiful Mediterranean region.
