PROPERTY BUYING GUIDE

Table of Contents

What are the Legal Restraints for Foreign Investors?

  • All country citizens are not allowed to buy a property in Turkey. Council of ministers announced which country citizens are entitled to buy a property in Turkey.
  • Foreign investors can acquire a total of 30 hectares of property at maximum and acquire limited in rem rights.
  • Property can’t be purchased or leased within military and security zones.
  • Foreign investors can purchase a property or limited in rem right in a district or town that is 10% of the total area utmost.
  • There is no other difference between foreign citizens and Turkish citizens regarding acquisition of a property.

Useful information for Potential Investors

  • Transfer of real estate ownership should be registered to the Land Registry Directorate
  • Foreign investors first need to apply to Land Registry Directorate to clarify if there are any constraints about the sale of the property
  • The land registry system used in Turkey is a reliable and secure system, whereby every real estate transaction is officially registered.
  • Preliminary contract is not considered as the official proof for real estate transfer if it is not registered in Land Registry (it is just a commitment)
  • You do not necessarily acquire a property in Turkey to obtain residence permit. In addition, having a property in Turkey does no ensure that you obtain a residence permit as an investor.
  • In a case of conflict between the sides on the property purchase, it has to be brought to the Turkish courts.

Which Documents Are Required for Land Registry Procedure?

  • Land registry of the real estate or information on the village/quarter, map section, plot, building, and independent section
  • Photo ID or passport issued by the country of which the foreigner is a citizen (notarized and certified translations should be submitted for ID cards and passports issued in alphabets other than the Latin alphabet)
  • If the procedure involves representation, documents clearly demonstrating the representation (order regarding guardianship, letter of authorization, power of attorney etc.)
  • Documents on the current market value of the real estate issued by the relevant municipality
  • Mandatory earthquake insurance policy for the buildings
  • A photo of the seller and two photos of the purchaser (taken within the last six months, size 6×4 cm)
  • Certified interpreter if a party does not speak Turkish

How to Choose a Reliable Investment Property Company to Work with?

International real estate investment is usually challenging process. Aside from the bureaucratic procedure, prioritizing and determining the right property require a professional consultancy. Investors feel the need to make sure that they are getting the right information. The most critical features of an investment consultancy firm for a smooth and comfortable investment process are explained below:

Localized Experience

A foreign investor needs to rely on the local knowledge of the consultants. Therefore, working with an experienced team that has expertise on local property market is significant to receive the most proper and accurate advice.

Transparency & Communication

Effective communication between the investor and company is the key to pursue a successful investment process. The right information should be delivered in a neat and quick fashion.

Specialized Assistance

Each investor has different needs and preferences according to their motivation. The consultancy service is responsible for understanding the investment criteria and provide personalized solutions.

What are the Taxes, Duties and Charges?

Investors are subject to various taxes, duties and charges for acquisition, utilization and sales of a property.

Acquisition

  • Title Deed Fee: 2% of the sales price for buyer and seller separately
  • Value Added Tax: 18% of the sales price. special VAT rates are applied for residential units under 150 sqm. net area, such as 1% and 8%
  • Stamp Duty: It is implemented at a rate of 0.948% on the highest monetary value stated or referred in the agreement (if the transaction does not involve any commercial activity, it isn’t applicable)

Utilization

  • Property Tax: Various rates are applied by the municipalities according to the type and location of the property
  • Surcharge for the Protection of Immovable Cultural Assets: 10% of the annual property tax
  • Compulsory Earthquake Insurance (DASK): It’s a must to obtain land registry and utility services such as electricity, water and sewage system connection

Leasing

  • Rental Income Tax: Between 15% and 35% of the rental income
  • Withholding Tax: Applicable if the annual gross rental income exceeds TRY 30.000

Sales

  • Capital Gain Property Tax: It is calculated considering the difference between the sales price and the cost of the property (incl. the acquisition value, expenses incurred due to disposal and remaining under the responsibility of the seller, and taxes and charges paid)
  • Value Added Tax: 18% of the sales price. For residential units under 150 sqm net area special VAT rates are applied such as 1% and 8%

Power of Attorneys Issued Abroad

The investors may choose to work with a power of attorney to represent themselves throughout the legal process of real estate acquisition.  If the power of attorney is issued abroad related documents regarding the authorization should be obtained and the conditions listed below need to be satisfied:

  • Obtained from Turkish consulates at their discretion over real estate
  • Obtained from competent authorities entitled to issue power of attorneys abroad
  • It should be prepared in the language of the country where it is issued
  • It is required to include a photo (with a clear seal and signature over the photo)
  • It should be apostilled, if issued in a country that is a party to The Hague Convention
  • Official signing the power of attorney should be certified by the relevant authority. Then, the signature and seal of such authority should be certified by the Turkish Consulate if the power of attorney is issued in a country that is not a party to The Hague Convention
  • The notarized and certified Turkish translation of the power of attorney that meets the above listed criteria