Investors Guide to Turkey

The Purchasing Process

It is advisable to fully ensure that Turkey does not hold any restrictions over the buyer’s nationality prior to beginning the purchasing process. Citizens of countries such as Cyprus, Czech Republic and Slovakia amongst others, should be advised that they may not be freely able to purchase property in Turkey.

Most of the EU countries, the United Stated, Canada and various countries in Asia, Africa and Latin America are freely able to purchase Turkish property. The only restrictions that are held over all foreign buyers are in municipal areas with less than 2000 registered inhabitants, and within military zones. Another restriction relates to the size of the property being purchased by foreigners, with a maximum of approximately 30,000m2 or a special permit will be required.

The purchasing process is similar to buying in other European countries, with a holding deposit required while the solicitors check through the paper work to ensure a safe purchase. The private purchase contract will be signed to enter into an agreement of the sale, at which point a reservation deposit will be placed. The deposit can vary between developers, and is usually between 10% and 25% of the purchase price.

With all purchases, permission for the sale will need to be obtained by the local Army headquarters and usually takes from 6 to 8 weeks. Once the permission is secured, the Title Deeds (Tapu) are arranged at the local Land Registry Office. Although it is not necessary, the use of a solicitor specialising in Turkish property is advised to ensure thorough checks for a safe purchase.

The processing of the Title Deeds can be a slow process in Turkey; buyers should be prepared to wait up to 9 months for the deeds to be issued. It is also a legal requirement for all property sales to foreign buyers to use a government authorised interpreter for notary processes.

Fees & Taxes

Associated purchasing costs for property in Turkey are very reasonably priced, totalling between 4.5% and 5.5% of the purchase price. The Registration and Notary fees include the processing of the various permits required, along with the compulsory government authorised interpreter, the services included for the registration fees and the Notary charges. All associated charges are based on the purchase price, and the fees for the Title Deeds are paid to the Land Registry.

• Registration and Notary fees are between 0.1% and 1%
• Stamp Duty fees are 0.75%
• Title Deeds are 1.5%

Taxation of earnings relating to Turkish property ownership is based on a sliding scale depending on earnings. Non-resident owners of Turkish property are charged a relatively high income tax however there are choices of payment methods to best suit owner’s individual requirements. Individual taxation applies in Turkey, so married couples will be taxed separately on all their sources of income. An exemption applies to the initial earnings on property of around €1,100.

• Rental income tax is charged between 14.6% and 24.8%
• Net income tax for all sources of earnings is charged between 15% and 35%
• Residential real estate tax is charged at 0.1% of the value of the property
• 1% VAT is charged to real estate with a surface area of more than 150m2
• Properties owned for more than 2 years prior to selling are exempt from Capital Gains tax. If sold prior to 2 years ownership a 20% tax applies, with an exemption of approximately €3,300 of the selling price.

The taxation method options available include the Deduction method and the Lump Sum method. The Deduction method exempts expenses such as electricity, water, insurance and administrative costs. The Lump Sum method enables a deduction of 25% of the gross income to calculate the taxable amount.

Financing the Property

Non-residents from most nationalities are now able to apply for mortgages in Turkey. A bank account will need to be opened and mortgages can be arranged through Turkish banks or through companies specialising in Turkish mortgages and loans. While applications for mortgages can be made after placing a deposit, it is advisable to speak with a provider prior to purchasing to receive a pre-qualification. The processes for approving the mortgages can be slow, so the pre-qualification can speed up the processes. Proof of income will need to be provided and some providers are able to offer loans in various currencies such as Euros, Sterling, US Dollars, Swiss Francs and Japanese Yen. Mortgages can be arranged for both purchases of properties under construction, and re-sale properties. We can provide approximate prices of the mortgage details however the calculations can vary between each company offering the services.

• Minimum loan amount is approximately €30,000
• Maximum loan to value is 85% of the purchase price
• Maximum of 20 years, or up to the age of 75
• Interest rates are between 4.5% and 6.5% as an estimate

More about overseas property finance

More about investing in Turkey:
Features & Benefits
Past, Present & Future
Reasons to Invest in Turkey
Visitors Guide to Turkey
Investors Guide to Turkey
Investing Information
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