Legal Information Guide
The system of property ownership in Turkey is based on the title of the property being registered with the Land Registry.
Who Can Own Property in Turkey?
First, the ‘reciprocity principle’ must apply between the countries of the person wishing to obtain acquisition of ownership. In other words, if a Turkish citizen can become the owner of real estate in the UK, then the same right applies to a UK citizen in Turkey.
Selling Property in Turkey
Capital gains made from the sale of a property will be taxable in Turkey if the owner is a Company. Individuals do not have to pay capital gains, provided they have owned the property for one year. In the UK, capital gains may be taxable depending on the individual’s situation. Current tax conditions were originally agreed in a double taxation treaty signed in 1986. These were amended in October 1988 and cover the reciprocal agreement in relation to income tax and corporation tax in Turkey and income, corporation and capital gains taxes in the UK. Property & Conveyance in Turkey
We work closely with Turkish lawyers particularly in connection with property transactions in the west of Turkey if any aditional advise is needed.
Persons wishing to buy property in Turkey can be apprehensive about their choice of lawyer since they will not be familiar with the firms nor, in most cases, with the civil law system. We can put these misgivings to rest by recommending the lawyers we work with who are reliable and will provide an efficient and professional service.
We can further assist by explaining the civil law procedures and translating documents. If a client so wishes, we can also act on their behalf, through a Power of Attorney or a written authority, to actually complete a purchase or sale of a property on their behalf.
1. Once, you have seen a property in Turkey that you would like to purchase you will need to find the deposit. This is payable by cash or credit card – Personal cheques are not accepted by banks here in Turkey. An initial payment of 5000 Euros is usually required. The exact figure will be confirmed individually with the Developer at the time of purchase. When this is paid, a receipt is given. The amount received is written into the contract.
2. You will need to have your passport with you. Photographs are also required; we will be able to show you where the nearest place to get these done is. (Approx £ 4 for 8 photos).
3. Then you should visit the Solicitor who will prepare the purchase contact. They are there to help you. You are paying for their services so please use this time to ask any questions you may have.
4. Should you not be present in Turkey for the actual purchase of your property, you then need to go (We will accompany you) to the Notary’s office (similar to Notary public in the UK) to sign a document giving your agent power of Attorney for the property, not for money. This enables us to continue with obtaining the Title Deeds in your absence. Usually then you will return to the solicitors office, where the sale contract showing the property address and payment details will have been drawn up and be signed by you the purchaser(s) and us the seller.
The initial stage has been completed and you do not need to be present for any more of the property purchase transaction. This process only takes a few hours.
You will be given the original contract and copy of the power of Attorney to take back home with you.
The same day or the next day your papers are forwarded to the Land Registry for all documentation relating to the purchase of the property, these documents are then forwarded to the Land Registration office in Izmir. Here everything is checked and then the title deeds (TAPU) are re-issued in the new owners name and forwarded back to the local Land Registration office who, in turn contact us. This process usually takes 6-8 weeks.
We will advise you of this when it happens. At this time, you will need to pay the final balance plus the 3% property tax.
Upon receipt of this, we can then sign for and collect your TAPU from the Land Registration office on your behalf and this will then be held in the office pending your next visit and collection.
On top of the purchase price, are there any extra taxes or fees payable?
Yes, there are some extra costs.
- A 3% of the property value tax. This is a once off payment and it is due for payment once the TAPU is received.
- The solicitor’s fee. Prices start from about £ 200.00 pounds and will vary depending on which solicitor you choose to use.
- An approximate £100 Notaries Charge for giving us the Power of Attorney to handle the documents relating to the property in your absence.
- It is compulsory to have earthquake insurance and we recommend you take out Full insurance home and contents cover as soon as the house is registered in your name. (The cost of this varies depending on the value of the property, its contents for the number of months it will be occupied.) Approximately £ 150.
- The connection of Water and Electricity into your name so the bills will come directly to your house. Does not apply to some properties.
This is an idea of costs for the purchase of a property of £50,000
Property price £50,000
Tax @ 3% £1,500
Notary’s fee £100
Full insurance (Incl. earthquake cover) £150
Utility Connections £180
Once you have received your TAPU there are some other charges, which need to be paid. We estimate annual costs per property to be as follows:
To be updated
Most foreign nationals can purchase property or land freehold in TURKIYE subject to certain provisos:
1. There must be a reciprocal agreement between TURKIYE and the relevant country. (There are agreements between TURKIYE and most European countries)
2. The property may not be within the confines of a Military Security Zone.
Subject to these provisos being fulfilled there is just one official permission required, which can take up to three months, before a foreigner may purchase his or her land or property. This comprises a confirmation from the Military Authorities that the property is not in a sensitive military area. Having confirmed all the above criteria through your barrister, you are free to enter into a private purchase contract with the owner. At this stage, a promissory sale contract (PsC) will be signed by both parties whether or not the military permission has arrived. It is now necessary to involve a barrister and pay a deposit or the full price of your property. If there are certain items of unfinished work to be completed on the property, it is advisable to pay only a deposit. In any case, it is best to consult a Barrister who can also act as your appointed representative under the power of attorney (PoA), to complete the purchase and assist with the Military clearance. You have been warned!
This has been much simplified due to a recent change in Turkish Law. The money may be paid in full by any international bank transfer system or in cash. Mortgages with Turkish banks are currently restricted to Turks.
Costs of Purchasing property in Turkey
1. Buyers tax: 1,5 % to the tax office / treasury
2. Sellers tax: 1,5 % to the tax office / treasury
3. Notaries fees: PsC + PoA 0.8 % – 1.5 % to the public notary
4. Registry of the promissory sale contract: 0.5 > 0.7 % to the tax office / treasury
5. Military Permission Expenses ± 0.1 %
All percentages are based on the purchase price
Purchase prices include the above costs. The declared purchase price may sometimes differ from the actual purchase price. Additional to the above are legal fees per capita / head. Regarding structural and city planning surveys, they are not commonly carried out or necessary in TURKIYE, but can be done should sufficient information not already be available from your barrister
Annual cost the property tax is assessed on the “fair market value” for the property declared by the legal owner, hereafter referred to as the “declared” value. This must be above the value estimated by the municipality. The declared value is valid for 1 year, to be ratified by a certain percentage set by the State, the following 4 years. The payment is then 0.01% of that value for houses; 0.03% for land and 0.01% for agricultural land, made to the municipality. Refuse tax, introduced for houses in 2002 is around £ 5 > 25
If you ever decide to sell
When you decide to sell your property, the original investment and the profit can be freely taken out of the country. The only costs payable at point of sale area 1,5 % sellers tax of ” declared ” value. Help of a barrister is advisable.
Tax Position: In Turkey and in UK
“Declared” profit made on the disposal of a property is taxable in TURKIYE. In the event of rental income, the “declared” net amount is also taxable in TURKIYE. It is essential to take legal advice with reference to the “declared” values on your property. “Declared” rental income will be taxable in the U.K. in most cases. Relief against U.K. taxes for some of the Turkish taxes paid is available if the Turkish tax is an “admissible” tax. On disposal of the property, the gain made, if “declared”, would be regarded as a capital gain. The tax payable on the gain depends on the individual owner’s tax position. There is a taxation agreement between the U.K. and TURKIYE signed 19th February 1986 which has now been ratified by the legislature of both countries that prevents double taxation. Again, professional advice is strongly recommended.
We hope this has been helpfull in deciding to buy property in Turkey.
Turkish Dreams Real Estate