Buying Real Estate Property in Turkey
TURKISH CONVEYANCING PROCEDURE
As in most foreign countries, the conveyancing procedure in Turkey is complex and should be undertaken only with legal representation at all stages, thus ensuring the buyer’s interests are upheld and all Contracts and transactions are legal and binding within the Turkish Legal system.
Foreigners may purchase freehold land and property in Turkey, in their own names, provided that:-
1-) Their Country has reciprocal agreements regarding property purchase with Turkey. (The United Kingdom and Turkey have these agreements in place).
2-) Military investigtions are finalised and a clean record is received for the buyer, who should not have any criminal record or have a background of working in intelligence, or record for spying etc).
3-) The land or property is outside Military or Restriced Zones.
When a buyer has decided to purchase land or property within Turkey it is strongly advised that they appoint a Solicitor and Power of Attorney (POA) to act on their behalf. Under normal circumstances the buyer’s Solicitor will act as POA..
Once appointed by an Authorised Notary, the POA will then be legally entitled to act on the buyer’s behalf. If required the POA can be empowered with access to Bank transactions or anything deemed necessary, by the client, to act on the their behalf..
The POA can undertake the following:-
1. Perform search at the Title Deed Registry Office.
1.Confirmation the deeds are clear of debts
2.Confirmation the deeds are free of litigation
3.Confirmation of the owner of the deeds
4.Confirmation there are no discrepancies over the title deeds
2.Qualify all outstanding debts to be settled at the Tax Office
3.Apply for Military approval
4.Peparation of Sales Contract in Turkish and English
5.Preparation of Land and/or Building Contracts
6.Perform registration of the Title Deed (TAPU)
Note: For each new conveyancing transaction, the purchaser must seek Military clearance against the property and also against the buyer’s own name.
Costs
The disbursements which the buyer may be required to pay, in addition to legal fees, are as follows : -
£
Solicitor fees 300 pound inclusive of translator
Military Clearance fee 300 pound Legal Translator fee 40 pound per document
Notary Stamp fee 40 pound per document
Water and Electric connection 250-400
Stamp fee on transfer tax 100 pound
3% Purchase Tax payable at the Title Deed Registry Office on transfer of Title Deeds (TAPU).
The Buying Process
1-) A non-refundable, negeotiable, reservation fee can be paid by the buyer to take the property out of the market for up to 20 days.
2-) A Private Purchase Contract is drawn up between the buyer and owner/builder. The Contract should contain all details and conditions related to the purchase and Terms and Conditions of payment, together with buyer’s and seller’s responsibilities The buyer will be required to pay a deposit in an agreed time to activate the contract.
(Note:- The section in this document under the heading “Contracts” gives details of clauses which should be considered for inclusion).
3-) Once the Contract is signed by all parties and activated the property is considered as sold. This protects the buyer from the owner, as the owner, after signing the Contract, cannot re-negotiate the price or sell to another bidder. The owner is also protected as the buyer has agreed to the methods of payment, and will forfeit any monies already paid if the Contract is not adhered to.
4-)After the Contract is signed and the deposit paid, the process of applying for Military clearance can begin. This usually takes 3 – 4 months and the TAPU cannot be transferred to a foreign purchaser before clearance is received.
Registration of Property
After Military clearance has been received and all outstanding monies paid the property can be registered in the buyer’s name.
How to do this
1. Register with the Tax Office to receive a Turkish Tax Number
2. Have the transfer of Title (TAPU) registered in the Title Deed Registry Office
3. Register as the new owner with the Municipality, prepare and submit a Real Estate Tax Statement
4. Register utilities, Electric, Water, Telephone in the buyer’s name.
Other incurred costs
1-) A 1.5% tax (Stamp Duty) to be paid by both the buyer and the seller during the transaction
2-) Agent’s commission
3-) 0.3% donation to Education Funds etc.
4-) Annual Property Tax paid to the local Government, at the rate of 0.3% of the declared value of the property. Revaluation is conducted by the local Government every 5 years
5-) Environmental Cleanliness Tax calculated on the square meterage of the property
Note: New properties are exempt from Annual Property Tax for 5 years.
Capital Gains
Capital gains made from the sale of a property are taxable. However, individuals do not have to pay Capital Gains Tax provided they have owned said property for more than 5 years.
Should the property be sold within this time period the rates for Capital Gains Tax are detailed below:-
If the profit is equal or less than 6,000 YTL there is no tax, however above this ceiling the following percentages apply:-
Between 6,000 YTL 7,000 YTL 15% of income is due
Between 7,000 YTL 18,000 YTL 25% of income is due
Between 18,000 YTL 40,000 YTL 27% of income is due
Above 40,000 YTL 35% of income is due
Taxes due on Rental Income
If the rental income is less than 2,200 YTL per annum no tax is due, above that income the following percentages apply:-
Between 2,200 YTL 7,000 YTL 15% of the income is due
Between 7,000 YTL 18,000 YTL 25% of the income is due
Between 18,000 YTL 40,000 YTL 27% of the income is due
Above 40,000 YTL 35% of the income is due
Other considerations
It is strongly recommended that for all payments during the buying process and for future expenses you open a Turkish Bank Account.
Property may be sold to Turkish or foreign nationals without any restrictions and funds transferred to the country, currency and Bank of choice
Contracts
Although not exhaustive the following clauses should be considered for inclusion when drawing up a Contract between the buyer, seller, agent and professional representation:-
1. A detailed description of the property including address, TAPU details, technical conditions etc.
2. The actual price to be paid to the seller for the property. Please note that when the contract includes any “price” clause, then both the buyer and seller are liable to pay Stamp Duty of 0.75% of the value stated. However, mentioning the actual price allows you to secure your rights in case of a future legal dispute.
3. The details of the Bank Account of the seller, it should be a single account into which payments to the seller are to be made.
4. The details of the Bank Account of the professionals used, again a single account should be used for all payments to professionals.
5. The Payment Terms and Conditions, payments to the seller - including deposit, interim, final payments and payments to an Agent or Solicitor ought to be separately identified.
6. A statement emphasizing that the seller and the buyer will pay their own tax liabilities. Some sellers may try to force the buyer to pay all taxes including theirs with regard to the sale of the property. This is illegal
7. The fees and commissions to be paid to the Solicitor or Agent, this will secure the buyer in the knowledge that they will not be involved in tax evasion caused by any professionals involved in the transaction.
8. Under what conditions and how any monies paid by the buyer to the seller will be refunded.
9. Force majeure conditions, for example:- what if a legal obstacle occurs in the future.
10. How current tenants, if, any, will be treated.
11. How over-due debts, if any, of the current owner, which are property related, will be addressed.
12. How existing fixtures and fittings, if any, will be handled.
13. Whether parties can give up the sale/purchase, and if so, under what conditions and what, if any, penalties will be incurred.
14. How to keep all parties regularly informed of on-going transactions.
15. How a Power of Attorney, if any, will be cancelled or amended, how other parties will be kept informed of this.
16. Detailed permanent contact information of all signature holders, to include official identification of all parties.
17. If one of the parties breaches the promises contained in the Contract, who will decide under what conditions a breach was realized.
18. How disputes will be sorted out.
19. The rights and responsibilities of the persons whose signatures appear on the Contract..
20. All Identity Numbers of Turkish nationals (TC Kimlik Number) who are to sign the Contract, the Bar Registry Number of the Solicitor being used and the Trade Registry Number of the Real Estate Company must be recorded.
21. Before signing the Contract it is necessary to have it translated into English and Turkish in the presence of a Sworn Translator.
22. It is essential that both English and Turkish versions of the contract are signed in the presence of The Notary Public and are then duly notarized to ensure that:-
a. The people who are signing the Contract and their signature’s are genuine
b. The Contract is in line with current Turkish laws and officially acceptable anywhere in Turkey.
c. The terms within the contract are binding for all parties.
Residency
It is currently, under Turkish Legislation, not necessary to apply for Turkish Residency to purchase property or land within Turkey.
A Tourist Visa will be issued on entry to Turkey, at a cost of £10, this is valid for 90 days.
If, however, a person or persons wish to reside within the country for more than 90 days, it is necessary either to:-
a. Leave the country and re-enter, in one day, by traveling to the Greek Islands of Kos or Samos by ferry, or returning to country of origin.
b. Alternatively an application can be made to the Turkish Foreigner Control to issue a Residents’s Permit, (Foreigner Control for Altinkum is in Aydin). A Resident’s Permit can be obtained from 6 months up to 5 years, current costs detailed below:-
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