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LEGAL ADVICE

A BUYER'S GUIDE TO PURCHASING PROPERTY IN NORTH CYPRUS
Under the laws of the Turkish Republic of Northern Cyprus (TRNC, non-TRNC Citizens are entitled to take title to only one property up to a maximum area of 5 donums per person providing that the property only consists of one dwelling.

Once you have decided on a property, you will need to instruct a lawyer to represent you in the purchase. The first step will be an initial meeting with the lawyer so that the lawyer can obtain the necessary information and details regarding the property. Your lawyer should then carry out some legal checks to ensure that the title deeds to the property are sound and that all necessary building permits and other legal documents are in place. Once this has been done, your lawyer will then prepare a Contract of Sale. The Contract of Sale should include all important terms, such as plot number, plot size, price, payment schedule, completion date and all floor plans and specifications should be attached to the contract. The contract will be sent to both the vendor and the purchaser for review. When both parties are happy the contract will be signed.

Once the Contract of Sale has been signed, your lawyer will arrange for this to be registered at the District Lands Office within 21 (twenty-one). Stamp Duty at the rate of 0.5% will need to be paid on the Contract of Sale before registration can take place. Once the Contract of sale is registered the purchaser is protected against the land being sold to a third party and the Contract will take priority over any subsequent encumbrance.

The next step in the process will be for your lawyer to apply for your permission to purchase. Under the laws of the TRNC, anyone who is not a citizen of the TRNC must obtain permission to purchase from the Council of Ministers before the title deeds can be transferred into their name. You will need to provide your lawyer with a police certificate from the police in your home country. It can take around 12 months for the permission to purchase to be granted. Once it has been granted, your lawyer will notify you and your lawyer will then arrange for the transfer of title deeds to be carried out. Although the permission process can be lengthy, this will not stop you from moving into the property as soon as the property is ready for completion and you can still sell the property without taking title if you wish to do so.

There are four main taxes involved in any property sale and purchase transaction. These taxes are as follows:

LAND REGISTRY TRANSFER FEE
This is usually payable by the purchaser and is paid on transfer of title to the Land Registry. The current rate is 6% of the price. However, every person has a once in a lifetime option to reduce this to 3%. If a Purchaser elects to use this option on the purchase, he or she will only pay 3%. Once this option right has been used, the Transfer Fee payable on all future purchases by that person will be 6%. On most property purchases, there is also a small local municipality tax which is 1% of the Transfer Fee amount.

VAT FOR PROPERTY TRANSACTIONS
VAT is only payable where the transaction is a commercial transaction. On new constructions, VAT is payable. VAT is usually payable by the Purchaser on the date on which possession of the property is delivered to the Purchaser in return for an official VAT invoice (known as a fatura in Turkish) which is then produced to the Tax Office on transfer of title as proof that the VAT has been paid. The current rate is 5% of the price.

STOPAJ TAX
This is usually paid by the Vendor on transfer of title. The amount payable depends on whether the Vendor is a Professional Vendor (such as a construction company) or a private individual. If the Vendor is a Professional Vendor, the rate will be 4.7% of the price (with 4% payable by the Vendor on transfer of title and the balance of 0.7% payable by the Vendor with the year-end accounts). If the Vendor is a private individual, the rate will be 2.8% of the price. However, all private individuals have a once in a lifetime tax free sale option for a house and land not exceeding 1 donum (14,400 square feet or approximately 1338 square metres) with no olive or carob trees situated thereon. Should the land exceed 1 donum in size, the once in a lifetime tax free sale option may only be used in connection with the property and the first 1 donum and so stopaj will be payable upon the remainder of the land at 2.8%. Should the land be described as having olive or carob trees situated thereon, the once in a lifetime tax free sale option may only be used in connection with the property situated thereon and so stopaj tax will be payable upon the whole value of land at 2.8%.

STAMP DUTY
This is 0.5% of the Contract price provided this is paid within one month of the date of the Contract. Although, under the new Legislation this must in fact be paid before the Contract is registered which, therefore, reduces this to 21 days.

RESIDENCY
Obtaining residency in the TRNC is a straightforward process for anyone who has purchased property in the TRNC. Whenever a person enters the TRNC, their passport is stamped at the port of entry with a tourist visitor. This entitles that person to remain in the TRNC for the period of time stated on the tourist visa (usually three months) without working. For people who wish to stay in the TRNC for longer than the period of the tourist visa, a residency permit must be obtained. To obtain this, the first port of call is the local police stations immigration department - in Kyrenia this is near the Wednesday market.You will need to produce to the police the following documents:

  • Passport original and photocopy.
  • 2 recent passport photos (for first applications only)
  • pine or blue photo ID issued for the previous year (if renewing)
  • marriage certificate (and photcopy) if you are a married couple
  • If you have the title deeds to property in your name, the title deeds (original) and photocopy. If you have purchased a property under Contract of Sale, but have not yet received the title deeds to the property, the Contract of Sale (original with the Stamp Duty stamp on it) and photocopy. If you are living in rented accommodation the Tenancy Agreement (original with the Stamp Duty stamp on it) and photocopy.
  • A letter from your local village chief (Muhtar as they are known in Turkish) to say that you reside in his village. This letter is called IkametgahBelgesi in Turkish. You can usually find your Muhtar in the centre of the village where you live near to the local municipality (belediye) building or the post office.

Bank documents showing that you have a TRNC bank account which has sufficient funds or a regular income to enable you to support yourself in the TRNC without working (typically, you would need to show around £10,000 or equivalent in other currency per person in a bank account).

  • 2 passport photographs
  • Stamps (DamgaPulu in Turkish) (the amount required is constantly changing, so you should take a selection of stamps with you in case further stamps are required)

The police will then refer you to The Police will then refer you to your local state hospital, or now there are certain clinics which are licensed to carry out this work, for a health test. The test will check for infectious diseases such as HIV, hepatitis and TB. After you have had the health test, you will need to return to the Immigration Department of your local police station with the receipt for the payment of your health test and all of the above documents. After a week or so, you will need to collect your results from the hospital. These will be given to you in a sealed envelope which you must not open. After around 3 weeks, you will need to take the sealed envelope, your passport, some stamps (around 15TL) to the Immigration Office (Muhaceret Dairesi) in Nicosia where you will pay the fee of around 300TL and receive the residency stamp in your passport.

It is important to note that the residency permit only entitles you to live in the TRNC. It does not entitle you to work or to set up a business in the TRNC. To do these things you will need either a work permit or a permit to set up a business. The residency permit is valid for a period of 1 year. It must be renewed every year by following the same procedure. Children under the age of 18 years do not require residency permits. This is only applicable to adults. Therefore, families moving to the TRNC only need to apply for residency for the adult members of the family.

IMPORTING HOUSEHOLD GOODS
If you are planning to permanently relocate to the TRNC, you are entitled to bring the contents of your house from abroad to the TRNC, free from all import and customs duties and taxes. You are entitled to bring only the contents of one household if the items imported are excessive and are considered by customs to be more than those items reasonably required for one household import duty may be levied. You are also only entitled to bring used items. Brand new items and some electrical items will be subject to the import duty. The idea is that you are transporting the contents of your house overseas to the TRNC. To take advantage of this law, you will need to have the following documents:

  • Letter from the head of your village (known as the Muhtar in Turkish) confirming that you reside in the village.
  • Title Deed registered in your name or Contract of Sale in your name or Tenancy Agreement in your name for the property in the TRNC.
  • Passport photocopy of yourself and your spouse.
  • List of all dates of entry and exit into the TRNC. This is obtained from the Police Headquarters with your passport and photocopy and the required stamps. You must ensure that this document lists your exit and entry dates through both air and sea ports.
  • Full inventory of all of the items which you are bringing to the TRNC. This must be translated into Turkish and you will require two copies of this (some shipping companies will include the translation of the inventory as part of the shipping service please check with your shipping company, otherwise, you will need to arrange for this to be translated.
  • The Bill of Lading. It is essential that the Bill of Lading is issued by the shipping company in your name. If it is issued in the name of any person other than the person exercising their right to import house contents under this law, it will not be accepted.
  • Stamps

You must be present in person with the above documents at the Customs Department in Nicosia (Lefkoşa Gumruk). You will be required to fill in a declaration Beyaname and then your documents will be checked and the Customs Personnel will check your items and then you will be given an Import Licence. If you have stayed in Cyprus for more than 6 months at any time, you are not eligible for a customs exemption certificate. This exemption is given once only and is only given per couple not per person. All personal effects must be imported within the 6 months of entrance to North Cyprus.

As a company, Bastaslar Construction Ltd choose to work with Naomi Mehmet & Partners, Advocates and Legal Advisers. This firm is highly skilled and experienced in conveyancing matters. If you require any further information in relation to the buying process or any other aspect of relocating to North Cyprus, please contact Naomi Mehmet & Partners on 0090 392 816 04 40

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