Legal matters you need to know when buying a property in Turkey

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Foreigners can own real estate in Turkey, as long as it is located in urban areas that fall under the jurisdiction of a municipality or borough, and not in rural or military restricted areas.

To acquire the title deed of a property in Turkey, an application must be submitted to the local Land Registry Office where the property is located.

The title deed (TAPU) transfer will be processed by the Land Registry Office after completing necessary checks and requirements.

During the transaction, documents proving the full purchase price has been transferred into Turkey must be presented, and a 1.5% duty tax must be paid by both the buyer and seller.

Additionally, an annual property tax of 0.3% is collected by municipalities for private buildings.

However, newly built properties are exempt from this tax for 5 years. All properties are subject to revaluation for tax purposes every five years.

The purchased property can be resold or rented out, and the proceeds can be transferred out of Turkey, but regulations for properties purchased for business-related purposes may differ.

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Laws and regulations for buying real estate in Turkey.

Turkey is increasingly attracting tourists due to its vast untouched coastline and Mediterranean climate that provides year-round sunshine.

Purchasing real estate in Turkey is also gaining popularity as a potential investment opportunity given Turkey’s potential EU membership and its status as one of the world’s fastest-growing emerging markets.

This information provides a general overview of the process of buying a property in Turkey according to Turkish Laws (Article 35 of the Turkish Constitution) and potential issues that may arise during the process.

It’s important to note that different properties have different laws (depending on location).

To avoid disappointment and ensure a smooth process, it is recommended to consult one of our property experts at Move 2 Turkey.

Keep in mind that buying property in Turkey can be complicated, and it’s essential to seek professional and knowledgeable service.

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Turkish Property Legislation

Ownership rights are outlined in Article 35 of the Turkish Constitution, which states that individuals have the right to ownership and these rights can only be restricted by other legal regulations.

These restrictions can include zoning laws and restrictions for foreign ownership.

The laws surrounding property ownership are further detailed in the Turkish Civil Code, Article 633, which explains how ownership is obtained.

For foreign individuals purchasing property in Turkey, it is crucial to register the land in Turkey, the Land Registry Department has regional directorates that are divided into provincial or district offices and are controlled by the government.

Property Registration and Delivery in Turkey

In many European countries, the process of transferring property ownership from the seller to the buyer involves going to a public notary.

The public notary is responsible for ensuring that the transfer is done correctly, and also for handling the delivery of the property, which is often done via a “deed of transfer” and registration in the property registry.

Unlike other European countries, registering property ownership in Turkey is not handled by a public notary, but by an official of the Property Registry Department.

Both the buyer and the seller are required by law to be present during the registration process.

It is possible to authorize another person to handle the registration, but this requires a notarized authorization.

As a safety measure, it is also recommended to authorize the sale through an official notary.

In Turkey, the delivery of the “Title Deed” does not require the involvement of a public notary. The only requirement for delivery is that it is done in writing.

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After the registration and delivery, the Property Registry Department issues a proof of ownership, known as a “Tapu.”

Ownership is only officially obtained once the construction of the building(s) is complete and the full amount has been paid.

Generally, there are no legal restrictions for foreigners to acquire property ownership in Turkey.

However, the Village Act and Military Prohibited and Security Areas regulations can be a limitation to the acquisition of properties by foreigners.

According to Article 87 of the Village Act, foreigners are not allowed to own property outside of the center of a village if the land hasn’t been surveyed yet or it belongs to the Ministry of Forest.

Similarly, the act regarding Military Prohibited and Security Areas can restrict the acquisition of property by foreigners if the property is located within a certain distance from military sites or strategically important areas.

The legal restrictions mentioned above may be subject to change or even be partially lifted by recent legislation that aims to improve Turkey’s economic position, align regulations and laws with EU standards, or promote tourism for foreigners.

Final words

Buying property in Turkey involves following a range of regulations. Not only do formal regulations need to be considered, but foreign buyers must also be aware of the various legal exceptions that apply to acquiring real estate.

When buying property in Turkey, it is important to approach the zoning schemes, the background of the seller, and the legal restrictions imposed by Turkish property legislation objectively, dependably, and with professional guidance.

Move 2 Turkey provides valuable assistance and conducts objective and thorough investigations on the property that you are interested in.

Our knowledgeable staff is available to assist you. Contact us via WhatsApp, email, or in person for more information.

Tax information for buying a property in Turkey

Non-Residents

Non-residents are only taxed on income generated from Turkish sources in Turkey and are subject to a number of other property-related taxes as outlined below.

The tax year in Turkey is the calendar year, and an individual is considered a resident in Turkey if they spend 183 days or more in any tax year in Turkey.

There is an agreement between the United Kingdom and Turkey for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains.

However, at present, Ireland and Turkey have not signed a dual taxation agreement, but one is expected in the near future.

This will affect the tax implications on income received from Turkish property.

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payable taxes when purchasing a property in Turkey

Both the buyer and seller in Turkey are required to pay 1.5% title deed transfer fees on the sale of a property, which totals 3% based on the declared value of the property.

However, the declared value of the property cannot be lower than the “tax value” determined by the local town hall, which is also used as the base for property tax.

Additionally, 1.5% is also payable on the registration of new buildings constructed on land.

The VAT rate in Turkey for the sale of property is 18%, but houses under 150 square meters in net area are subject to 1% VAT.

If a property is owned by a company in Turkey, selling it after holding it for 730 days (2 full years) may not be subject to VAT and corporate tax, subject to other conditions.

Stamp duty is also levied on sale and lease contracts in Turkey, with rates ranging from 0.15% – 0.75% depending on the value of the contract.

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Recurring property taxes in Turkey include:

Rental income for non-residents in Turkey is taxed at scaled rates from 15% – 35%.

Expenses directly related to renting the property, such as repairs and management fees, are tax-deductible.

There is also an option to use a lump-sum expense method, which allows taxpayers to deduct 25% of gross income as expenses without providing documentation.

Tax is collected through a withholding tax, and if a double taxation agreement (DTA) is in effect, reduced rates of withholding tax may apply.

A Turkish tax return must be filed by March 25th, with taxes payable in two equal payments in March and July.

Local Turkish property taxes are payable in two equal installments in May and November.

Rates are calculated based on the value of the property and are subject to thresholds set by the Tax Authorities as follows:

  • Residences: 0.1%
  • Other buildings: 0.2%
  • Land: 0.1%
  • Farming land: 0%
  • Vacant land (allocated for construction purposes): 0.3%

Other relevant taxes

Capital Gains Tax (CGT) on the sale of property in Turkey is considered income for the year of assessment and is taxed at the marginal rate of 15% – 35%. A capital gain of up to TRY 6,800 in 2008 is exempt from CGT.

Information on the disposal must be submitted within 15 days of the sale. Properties owned after January 1st 2007 and held for more than 5 years are exempt from Turkish CGT.

Inheritance Tax (IHT) rates in Turkey range from 1% – 30%. Tax on inherited property is calculated based on the taxable value of the asset.

The law of obtaining the Turkish citizenship through buying a property in Turkey

In accordance with the amendment to the Turkish Citizenship Law published in the Official Gazette in June 2022, a new convenience has been provided for foreigners who want to become Turkish citizens.

Foreigners who want to buy a property under construction may also obtain Turkish citizenship after signing a regulating contract from the notary for the property sale and committing to buy a property worth 400,000 USD.

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Turkish Citizenship by Property Purchase in Turkey

In June 2022, new regulations were added to make it easier for foreigners to obtain Turkish citizenship.

These regulations state that foreigners who sign a contract with a notary for the purchase of a property worth 400,000 USD and commit to pay for it in cash, may qualify for Turkish citizenship.

The notarized contract pledging that the property sale is made by cash payment and committing to not transfer or abandon the contract for three years is sufficient.

Additionally, foreigners who buy a property from unfinished or off-plan projects may also apply for citizenship under these new regulations.

Eligibility for Turkish citizenship through the commitment of property purchase is subject to the following conditions:

  • The commitment to purchase a property worth at least 400,000 USD.
  • The property commitment must be organized by a notary.
  • The notarized contract should state that the committed property will not be sold for 3 years.
  • The property purchase commitment is also valid for properties under construction or off-plan projects.

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Conclusion

When considering purchasing property in Turkey, it is important to be aware of the legal matters that may arise during the process.

There are various laws and regulations that apply to different types of properties, and it is essential to have a clear understanding of these in order to avoid any potential issues.

Some of the key legal matters to consider include zoning schemes, restrictions imposed on foreigners, and taxes and fees related to the sale of property.

It is also important to consult with a knowledgeable and professional real estate agent or attorney to ensure that all necessary steps are taken and that the property is properly registered and transferred to the new owner.