Title to Immovable Property in Northern Cyprus

Different types of title

The issue of Title to immovable property in Northern Cyprus is a complex issue and arises due to the nature of the political situation in North Cyprus. As a consequence of troubles between the Turkish and Greek Cypriots which occurred mainly in the 1960’s and resulted in the Turkish military intervention of 1974, property on both sides of the island was left or abandoned by its original owners.

In the Turkish Republic of Northern Cyprus (TRNC), this abandoned property was administered by the government in two main ways;

‘Esdeger’ or ‘Exchange’
Turkish Cypriots who had left land in the south were given points calculated on the value of the land which they had left behind. The TRNC Government established a matrix whereby the allocated points were used by the Turkish Cypriot to acquire freehold title to previously owned Greek Cypriot property which should, theoretically, be the equivalent value of land left behind in the south.

Immovable property to which title was acquired in this way by a Turkish Cypriot is known as ‘Exchange title land'.

The government also issued ‘points’ to other people, not for property which was left behind in the south, but as a gift, usually in reward for military services. These points were then used to acquire freehold title to a piece of immovable property.

Immovable property to which title was acquired in this way is known as 'gift land or TMD'.

'Turkish / Foreign Pre 74'
Property which was not owned and abandoned by a Greek Cypriot during this period and which was owned immediately prior to the military intervention in 1974 by a Turkish Cypriot or a foreign national is known as 'Turkish Title or Pre 1974 title or Foreign Title'.

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

The Transfer Fee which is payable to Land Registry Office

The Capital Gains Tax which is payable to the Tax Office

The VAT (KDV) which is payable to the Tax Office or to the Vendor

The Stamp Duty which is payable to the Tax Office

Different taxes apply to gifts of property for no consideration and transfer of property between family members.

Usually, Capital Gains Tax is payable by the vendor and the Stamp Duty and Transfer Fee is payable by the purchaser.

Taxes are generally paid on transfer of title. The percentages listed below are calculated as follows: the Transfer Fee is paid as a percentage of the assessed value of the property which is carried out just before transfer of title takes place. The VAT, Capital Gains and the Stamp Duty are based on either the assessed value or the contract value, whichever is the highest. Under new regulations, the Tax Office now requires a copy of the contract of sale to be presented to them prior to transfer of title.

TRANSFER FEE -The transfer fee is 6%. 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%.

VAT FOR PROPERTY TRANSACTIONS - 5% of either the assessed value or the sale price.

CAPITAL GAINS TAX – The rate will be 3.5% payable by the Vendor.

STAMP DUTY – This is 0.5% of the contract price provided this is paid within 1 month of the date of the contract. If it is not paid within this time, the rate increases in stages until after 6 months it becomes 1.5%.

Capital Gains Tax is usually paid by the Vendor, unless otherwise stipulated in your contract. Every private individual has a once in a lifetime tax free sale option (for a house and land not exceeding approximately 1 donum). If you use this option, you will not be liable to Capital Gains Tax on that sale. On any further sales, Capital Gains Tax will be payable at 3.5%, provided you do not sell more than 3 properties in one year, therefore qualifying you as a professional vendor. For professional vendors, there are no tax exemption rights. Capital Gains Tax is payable on every sale at a rate of 6.25%. Capital Gains Tax is not payable if you sell the property before taking title by undertaking an assignment of contract.

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