Informations

Property acquisition procedures in Turkey

Posted on 25.05.2021

The provisions concerning the acquisition of immovable property in Turkey by natural persons of foreign nationality have been regulated under Law No. 2644 of 1934, Article 35 of the Land Register (= gives the status of rights on immovable property) on title deeds. This law was amended by Law No. 6302 which came into force in May 2012. In accordance with this article, the obligation of reciprocity for natural/legal persons of foreign nationality to acquire property in Turkey has been abolished to reinforce the desire of foreigners wishing to invest in real estate. This meant that the right to buy Turkish real estate was granted to citizens of states whose laws allowed citizens of Turkey to buy property in their country.

The land register has a list of about 100 countries whose citizens of foreign nationality are allowed to buy real estate in Turkey without conditions:

Kuwait, Qatar, Yemen, Oman, Sudan, Germany, America, Argentina, Azerbaijan, Bangladesh, Barbados, Belarus, Belgium, Benin, Bolivia, Bosnia and Herzegovina, Botswana, Brazil, Brunei Darussalam, Bulgaria, Burkina Faso, Burundi, Djibouti, Chad, Saudi Arabia, Finland, France, South Africa, South Sudan, Georgia, Netherlands, Honduras, Germany, Finland, France, Greece, Hungary, Iceland, Ireland, Jamaica, Japan, Kosovo, Costa Rica, Luxembourg, Madagascar, Macedonia, Malawi, Malaysia, Mali, Norway, Panama, Suriname, Turkmenistan, Uganda, Venezuela and New Zealand.

 

1- Property acquisition procedures in Turkey

 

The acquisition of real estate takes place when the Buyer (or his representative) and the Seller (or his representative) sign the contract of sale to the management of the land registry.
The procedure is simple and straightforward. Once the buyer has made the payment to the seller, the seller requests the transfer of title to the property.

 


 

1.1 Required Documents

- Power of attorney (if the buyer does not come to sign personally).

- The identity card/passport: translated and certified by a certified translator in Turkey and validated by a notary, + 2 identity photos.

- Residence permit of the foreign buyer.

- Turkish tax number (If the foreign buyer did not obtain this number previously, an application must be made to the tax offices by submitting the identity card or passport translated and certified by a sworn translator in Turkey and validated by a notary before making the application to the land register. Lawyers generally provide it on behalf of of their customers).

 

Notes : other information and documents are provided by the seller. (Such as appraisal report, identity card + 2 identity photos, market value declaration document obtained from the municipality where the property is located, no tax debt)

After obtaining the permit from the Presidency of the General Staff and the presentation of the required documents, the land register must complete the real estate transfer operation. If the land register refuses the request of the foreigner for the purchase of the real estate, this decision may be challenged before the relevant regional office of the land register directorate.

Both parties must sign a sale and purchase agreement in the official form when they are in the land registry.

The selling price of the immovable property may not be less than the value of the declaration obtained by the municipality where the immovable property is situated. The price is noted on the title and the costs of the land register will be calculated on the basis of the selling price.

 


 

1.2 Restrictions

According to Article 35 of the Land Register Law, the total area of real estate that a foreign natural person may acquire on Turkish territory must not exceed 10% of the area of the region where the real estate is located and may not exceed 30 hectares in total in the country, per person. In addition, the Council of Ministers has the discretion to increase this limit up to 60 hectares per person.

 


 

1.3 Foreigners wishing to invest or buy property in Turkey should pay attention to the following conditions:

They must verify whether there are bank mortgages and problematic restrictions on movable property. This information can be easily obtained. In addition, it is imperative that the foreigner obtain an appraisal report from a company approved by SPK (= licence required by the Capital Market Board for clients to carry out investment transactions) before purchasing the real estate property. All negative and positive conditions are set out in this report.
When the client chooses the property, the lawyers in Turkey check the compliance of the deed even before the foreigner pays the deposit.

 


 

1.4 The costs

- Title transfer fee: 4% (2% for each party).

- VAT charge of 1%, 8%, 18% depending on the type of property.

- The cost of the evaluation report is generally between 2000 TL (=199€) and 4000 TL (=398€).

- Insurance costs: The compulsory DASK (Deprem sigortası in Turkish) insurance in Turkey is necessary for protection against earthquakes. DASK is a mandatory document for water and electricity subscriptions. The DASK costs in general between 150 and 1000 TL depending on the total area of the real estate and the insurance company.

Note: Additional costs and claims may be submitted depending on the project.

 


 

1.5 Tax dimensions of the purchase and sale of real estate for foreigners

If the purchased property is sold at a price higher than the purchase price during the first 5 years, a tax is levied on the amount between the purchase price and the sale price (about 40%).
In practice, however, it is possible to see that those who wish to waive this tax declare the purchase price at the sale the same and collect the difference unofficially.

There is no other tax for real estate sold except for the above. In the purchase, the previously mentioned securities fees of 4% (2% for the seller and 2% for the buyer) are at stake.

 


 

1.6 VAT exemption on the purchase of real estate in Turkey

On 1 April 2017, the Turkish Parliament abolished VAT on real estate sales to foreigners to benefit international investors. This act deals only with commercial and residential real estate.

Turkish citizens residing abroad and foreign citizens will not pay VAT provided they obtain new goods from the construction company. Those who unfairly benefit from the exemption will be held responsible for uncollected taxes and will be subject to a tax penalty.

The people who can benefit from this law are:

- Turkish citizens who live abroad and have not been in Turkey for more than 6 months in 1 year (with their work and residence permits).

- Foreigners who do not reside in Turkey.

- Organizations that have not made a profit in Turkey and that have no office.


This exemption applies only to primary real estate carried out by the builder who built the real estate. If a residence or office is purchased and resold to someone else, this type of real estate is considered secondary and does not fall under this act.

If the property purchased under the exemption is sold in one year, the unpaid tax is paid with the late interest calculated on the basis of the deferred interest rate in article 48 of the Act, n°6183, at the tax office of the place of succession, prior to the property title transaction, by the person who sold.

Note: VAT is not calculated in this transaction because half of the price is purchased by Turkey in foreign currency and paid to the seller before the invoice is issued.

 


 

1.7 Commercial companies

Foreign companies cannot buy real estate in Turkey.
However, Turkish companies, which co-found partners of the foreign company in Turkey, can buy real estate.
It is possible to buy a property with a company registered in Turkey whose shares may be held by a Luxembourg or French company.

 


 

How to create a company in Turkey?

If it is an LLC, it must file a minimum of TL 10,000, and if it is an SA, a minimum of TL 50,000. They can use that capital when the business is created, so it’s not a cost.

1- In terms of expenditure, where the enterprise’s capital is at least, there are establishment expenses such as TL 4500-5000, on average. Notary’s fees, chamber of commerce fees, signing circular fees, lawyer and accounting power of attorney are included in this price.

2- Second expense: they must deal with an external accountant. This accountant must keep the company’s books and report them to the tax office, even if the company is not active. The average cost for an inactive company is TL 800 per month.

3- Third expense: they must have a legal address. They can benefit from virtual office services such as Regus. The monthly fees of the companies providing the address service when they declare it as a legal address are in the order of TL 250-350. These fees are usually charged in cash. In other words, there is an address cost of about TL 3000 to TL 3500 per year.

4- The one-time fee for establishment procedures is USD 1000.

Additional information:

If the person establishing the immovable property is a foreign national, he must obtain the authorization of the Governor for each immovable property purchased. We provide services to obtain this authorization which takes 2-3 weeks on average. Our service fee is 500 USD.

In case of purchase of real estate by creating a company in Turkey, the VAT exemption cannot be used. Because you become a legal person residing (residing) in Turkey.

Foreign companies cannot directly buy real estate in Turkey. However, we can create a company and buy real estate in Turkey, the foreign company being a 100% partner. This makes it easier for investors to withdraw their money from Europe.

Then, if the buyer so wishes, he can make the payment to the Turkish company of which he is associated and register the act in his personal name. In other words, the money enters the Turkish company from abroad, the payment is made by the Turkish company to the construction company. But the title is given to the owner and the official of the company. In this way, the VAT exemption becomes possible.

 


 

1.8 Provisions for Bringing Money (Purchase Amount) to Turkey

It is essential to transfer the currency to Turkey through the bank. If the money is brought through the bank, the authentication of the foreign currency brought into Turkey is provided by a bank receipt. Payment can also be made with a credit card issued by a foreign bank. In this case, this is confirmed by a receipt or a document from the linked national bank indicating that the payment is made and brought to Turkey in foreign currency. However, if it is physically brought by the buyer, it must be confirmed by a document obtained from the Customs Administration.

Note : According to the law in which Law No. 6824 was published in the Official Journal, foreign currencies introduced before 8/3/2017 are not considered as foreign currencies introduced into Turkey under this exemption.