Additional Purchase Costs and Procedures in Northern Cyprus

How are the 17.5% purchase costs for property investments in Northern Cyprus broken down?

Of these 17.5%:

6% real estate tax are incurred when the sales contract is registered at the Tapu (Land Registry).
0.5% stamp tax are incurred when the sales contract is registered at the Tapu.
6% is incurred when the title deed is transferred to the buyer (new owner).
5% VAT is incurred when the title deed is transferred to the buyer (new owner).

All taxes and VAT are to be paid at the tax office. The tax office documents the successful payments by stamping the purchase agreement. The Land Registry completes the registration and title deed transfer based on the stamped documents from the tax office.

Does the buyer need to pay the entire 17.5% purchase costs upfront at the time of contract signing?

No, the 17.5% is divided into two parts: 6.5% at the time of contract registration and the remaining 6% (plus 5 % VAT) at the time of title deed transfer to the buyer. This allows for a distribution of costs across different stages of the purchase process. There is also the possibility of considerably reducing these costs by utilizing a trust or - especially for investment purposes - not registering the sales contract at all. This maximizes return on investment but also entails a certain risk.

Are there ways to reduce the amount of purchase costs?

The amount of taxes and fees is based on the value declared at the Land Registry, which in the past was often lower than the actual sales price. Directly reducing the official taxes and fees is not legally possible, but the valuation of the property affects the overall costs significantly. It is important to conduct all transactions in compliance with regulations to avoid legal issues. The base value is either the price in the sales contract or the price determined by the valuation department of the land registry. Lately - as prices in the sales contracts were often understated - the land registry more frequently relies on its own determination (mostly based on other sales in the respective area) thereby getting closer to the actual market value of a property.

What guarantees the final transfer of the property in Northern Cyprus and the payment of the sales price?

Due to recent changes in regulation sales contracts need to be prepared by a lawyer. TIMONDRO works with a well selected and audited lawyer team to guarantee 100% secure payment, contract registration and title deed transfer.

How long does it take to set up a trust company and complete the property transfer?

Setting up the trust company usually takes about 2 weeks. The responsible law firm guarantees the final transfer of the property and the secure payment of the sales price (minus the deposit). It is most critical to select the right lawyer!

What other costs might be incurred during the property purchase process on Northern Cyprus?

Additional costs may include lawyer and accountant fees, bank charges, and local authority fees, potentially totaling another 2,500 to 3,000 GBP (one time payment). However, these costs can vary and may be lower or higher based on the specifics of the selected property investment in Northern Cyprus.

Are there any additional fees charged by lawyers for property transactions?

No, lawyers usually charge a standard fee ranging from GBP 1.500 to GBP 3.000. The service usually includes preparing sales contracts, handling payments, applying the permission to purchase and registering the sales contract at the land registry. Please keep in mind that "Not all lawyers are created equal." Especially on Northern Cyprus legal services often lack quality, transperency and speed. So choosing the correct lawyer is of greatest importance. Many lawyers also do not warn of potential risks - even though they are legally bound to do so.

Also the equation "you get what you pay for" does not hold on Northern Cyprus. In our experience many times especially the expensive and prestigous law firms or lawyers on Northern Cyprus provide the worst service, are not very responsive and do not put themselves in the client's shoes.

Our service network of course also includes extensive legal services and we do make sure that you get the best legal advice in person, on the phone, per email, at all times. Just contact us to learn more!

How is property acquisition by a foreign citizen usually structured in Northern Cyprus?

The common structure involves either registering the sales contract or establishing a trustee company in the form of a British Limited company ("LTD"). Legal fees for setting up the LTD and supervising the property acquisition process range from approximately 2,500 to 3,000 GBP. For investment purposes a significant number of investors choose not to register the sales contract. This maximizes potential return on investment, but bears a higher risk as well. For detailed advice, please contact us.

What is the land transfer tax in Northern Cyprus, and when is it payable?

The land transfer tax is 12,5% of the officially declared purchase price and is payable at the time of property transfer at the land registry, not at the down payment stage. In the case of registering the sales contract at the land registry before the transfer of the title deed (this is actually the most common case and imperative for foreign buyers) the initial tax payment is 6 % (at the time of registering the sales contract at the land registry) plus 0,5% stamp tax and another 6 % at the time of the title deed transfer (which usually - due to the permission application process - takes about 12 to 18 months). Furthermore there is for new properties 5 % VAT, due at the time of transferring the title deed.

Navigation