1.1. Who can buy a real estate in Turkey?
1.2. What is the legal framework for property ownership?
1.3. Are Turkish citizens and foreigners treated differently?
1.4 Purchasing procedure
• Contract
• How to make payments?
• Foreign Banks which have branches in Turkey
• Documents requested by the local Title Deeds Registry Office
• What is a Title Deed?
1.5 Costs, Benefits, Taxes and insurance
• Electricity, gas, water, telephone, and heating issues & utilities
• What gains can be attained through property? Are those gains taxed?
• Can you transfer the money you make through your property abroad?
• Taxes and Compulsory Insurance
1.6 Residing in Turkey
• Residence visa requirements
• Can you bring your petadüzs to Turkey?
• Can you bring your car to Turkey?
• How much money can you bring to Turkey?
• How much money can you bring abroad from Turkey?
• How much jewellery can you bring to Turkey or abroad?
1.7 Other Information
• Health Issues
• International and Intercity Transportation
• Religious Sites
• Insurance Services
1.1. Who can buy a real estate in Turkey?
Citizens and commercial corporate entities of the countries with which reciprocity agreements have been signed and companies established in line with Foreign Direct Investment Law No. 4875 in Turkey, may purchase a real estate in Turkey provided that the property is not located in military and security zones.
Countries with which reciprocity agreements regarding real estate acquisition have been signed
Countries whose citizens can buy only a building in Turkey
Moreover, citizens of the following countries can acquire real estate in Turkey upon the permissions of the Ministries of Interior and Foreign Affairs.
1- DJIBOUTI
2- LEBANON
3- PAKISTAN
4- TOGO
5- TRINIDAD AND TOBAGO
There is no other additional legal restrictions to the one described above. Regardless of what the financial/social record of people in their country is, people mentioned above are eligible to buy a real estate in Turkey .
Lastly, citizens of the following countries cannot buy a real estate in Turkey since any reciprocity agreement has not been signed.
1.2. What is the legal framework for property ownership?
The Constitution, the relevant provisions of the Civil Code, , the Foreign Direct Investment Law and the relevant legislation form the legal framework which enables foreign people or corporate entities to buy real estate in Turkey.
Attachments: the Title Deed Act (original in turkish)
the Foreign Direct Investment Law (original in turkish)
1.3. Are Turkish citizens and foreigners treated differently?
According to the legal framework mentioned above, both Turkish citizens and foreign owners have equal property-ownership rights.
1.4. Purchasing procedure
• Contract
Once the sale and purchase conditions are agreed with the owner or with his/her agent, you are advised to make a contract covering all important relevant issues in the presence.
Despite these contracts are not compulsory according to current regulations and mutual declaration of both the buyer and seller to the Title Deeds Registry Office is enough to carry out the transfer of ownership, having a robust sales & acquisition contract will allow you to protect yourself from some potential risks which may stem from the seller or agents.
To take off the asset from the market, you may pay a deposit which is negotiable between the seller and you. In some situations interim payments may be required.
As a next step, both buyer and owner (or their legally authorised agents) apply to the Office for transferring the ownership.
Upon your application, the office in question does a search on behalf of you whether the asset is in military and security zone or not. They ask the local military authorities to identify the property's exact status and once the military authorities confirm that the real estate is outside the military and security zones, then your application is automatically accepted.
In case the area of the land you want to buy exceeds 30-hectares, then the council of ministers’ approval is needed.
On the other hand, as in the case for companies owned by Turkish people, companies established in Turkey by foreign nationals (FDI companies) are not subject to neither military check/approval nor any area/size limitation.
However, for Commercial companies established in countries with which reciprocity agreements were made, there are few more steps. Their application to local Title-Deeds Office is forwarded to the General Directorate of Title Deeds, ("Tapu ve Kadastro Genel Müdürlügü-TKGM“ in Turkish) the parent organization. Then, TKGM double checks the application from the Ministry of Foreign Affairs, to find out whether bilateral international agreements allow the purchase. After the Ministry’s confirmation, the company becomes eligible for buying the property.
Finally, you are given an official ownership document called the Title Deeds.
• How to make payments?
According to the current regulations, any monetary transaction which exceeds YTL 8,000 (approximately £ 3,000) has to be made through banks, private financial agencies or Post Office (PTT).
Making your payments through the systems mentioned above will enable you to document your property-buying transactions. In case of any dispute or undesirable events, you will be able to make use of those records.
You can make your payment in GBP, USD, New Turkish Lira (YTL) or other convertible currencies sold or purchased by the Central Bank in Turkey. If you want to carry out your transactions in New Turkish Lira, then you are advised to convert your currency into YTL in Banks, Private Finance Organisations or authorised change bureaus in Turkey. You can find exchange rates at www.tcmb.gov.tr (please choose English version of the page and then click Data/Exchange Rates buttons).
You can open accounts in Banks in Turkey in your own name. All you need to do this is just to have a tax number from a local tax office, which takes only few minutes, and then to submit it and a copy of your passport as well to a Bank branch you want to use.
In case of opening joint bank accounts, make sure whether the other party has the right of withdrawing money from this joint account without your consent or not.
Thanks to the strict banking regulations in Turkey, any body cannot withdraw money from your account and any body cannot learn the details of your bank account unless;
• you provide the relevant person with a valid Power of Attorney, or
• you open a joint account on which the other party has a right to withdraw money.
Please also note that most of the big banks in Turkey provide internet banking services. In case you are interested in internet banking services, please ask your bank to provide you with the necessary authorisation passwords.
• Foreign Banks which have branches in Turkey
1.5 Costs, Benefits, Taxes and Insurance
• Electricity, gas, water, telephone, and heating issues & utilities
Electricity and natural gas are provided by the local distributing and retailing companies. Natural gas is supplied to only a limited number of cities.
Water is supplied by municipalities within the municipal borders. Water bills are charged on the basis of the amount of water you use.
Electricity, natural gas, telephone, and water utilities are billed monthly, quarterly or semi-annually depending on the supplier’s choice.
In cities where natural gas is supplied, gas central heating is the common practice. In other cities, communal heating or electric heating is more frequently observed. In coastal cities, solar energy heating and boiling systems are used very widely.
All electricity, natural gas and telecom companies are audited by the relevant Regulatory and Supervisory Authorities. According to the relevant laws, subscribers can complain about their suppliers in case of any disputes. Moreover, the Consumer Protection Law and the Competition Law are the two laws targeting to protect all consumers in the country.
It is suggested that as soon as you take over the ownership, you immediately subscribe to electricity, gas, water companies on behalf of your own name. All subscription transactions can be completed in a day.
On the other hand, if you plan to rent your property out, make sure that the tenants register to the utility suppliers on behalf of their own names.
Taking into account the average consumption figures of the Turkish residents, total cost of the utilities explained in this section is expected to range between €70 and €390 per month, depending on the features of the asset and the utilization of the utilities..
• What gains can be attained through property? Are those gains taxed?
A real estate property may enable an individual to obtain two types of gains.
Firstly, you can rent it out and earn rental income. In that case, you are to pay a personal income tax. Please see the section regarding tax for more information.
Secondly, the market value of your asset may rise and hence you can attain a gain. If you sell out your real property in the four-year-period following the acquisition date, you shall be subject to personal income tax based on the difference between the selling price and the inflation-adjusted acquisition price.
For sales by individuals after the 4-year-period following the purchase, no personal income tax is charged on the gains to be attained.
Moreover, inherited real estate is not subject to any personal income tax.
On the other hand, firms which are subject to corporate tax are exempt from any corporate tax relating to the real estate-based gains, real estate sale-and-acquisition levy, and VAT, if they sell a real estate that they have owned for at least two years.
• Can you transfer the money you make through your property abroad?
You can freely transfer abroad your money you will make through either selling or renting out your property.
• Taxes and Compulsory Insurance
Foreign nationals and Turkish citizens are no different in terms of taxes or levies to be charged.
Tax rates may be updated on a periodic basis. The rates as of January 1, 2005 are presented below. Please have a look at http://www.maliye.gov.tr/ for updates and other relevant information.
Real Estate Tax: Annual Real Estate Tax rates for uncultivated land, cultivated land, non-residence-purpose buildings, and residential buildings are 0.1%, 0.3%, 0.2%, and %0.1, respectively. Tax is calculated on the basis of the declared value of the asset which could not be less than a threshold determined by tax authorities. Tax payments are made in two equal instalments in the period March-to-May and November each year and those are collected by the local governments. The tax base is annually updated by a coefficient determined by the Ministry of Finance taking into account the inflation rate.
Inheritance and Succession Tax: The tax base is updated annually. There are some discounts for inheritance to daughters, sons and spouses. In case of spouse and children, YTL 75,719 is deducted from the tax base of each person. In case of a spouse with no children, the amount of deduction from the tax base is YTL 151,526. In case of successions without reciprocity the amount of deduction is YTL 1,748.
Environmental Services Tax (EST): Local water suppliers charge EST ofYTL 0.12 per one m3 of water used to residences. It ranges between YTL 12 andYTL 1,400 per year for the other types of buildings. The rates for metropolitan cities, on the other hand, are 25% higher the normal rates. These figures are updated annually. ESTs are reflected to the water invoices.
Motor Vehicle Tax: Depending on the cylindrical volume of engine and date of production of the vehicle, vehicle owners have to pay an annual tax ranging between YTL 2.22 and YTL 22,240.
Corporate Tax: Corporate entities have to pay a tax of 30% of their previous year profits.
VAT: General VAT rate is 18%. However, some goods and services are taxed at either 1% or 8%.
Commercial delivery of a residential property with net area up to 150 m2 is subject to a VAT of 1% whereas commercial delivery of those with more than 150 m2 is subject to a VAT of 18%.
Special Consumption Tax (SCT): Some goods which have effects on the environment, security and health, and luxuries such as.
• Fuels, industrial oils, petroleum products and petro-chemicals,
• Motor vehicles and sea vehicles,
• Beverages and products with tobacco
• A number of goods including caviar, perfumes, some make-up/cosmetic products, printed materials, some electrical and electronic devices are subject to an SCT.
Stamp Tax: There is a wide range of transactions on which a stamp tax is charged. Some important items and the corresponding rates are depicted below
Personal Income Tax: Personal income tax is updated by a Council of Ministers Decree for every calendar year. Main personal income items which are taxed are commercial income, agricultural income, wages, self-employment revenues, rent, interest and other incomes. Personal income tax rates on wages for the year 2005 are shown in the below table.
On the other hand, Personal Income Tax on wages for each slice of the above tax base is 5 percentage points lower than the percentages shown in the above table.
Minimum wage: In year 2006, minimum gross wage for 30 calendar days is YTL 531 for employees at the age of 16 or more (The cost to employer is YTL645.17).
In other words, if you establish a firm and recruit employees in Turkey, the monthly minimum labour cost will amount to approximately £220/employee.
Minimum wage is applied nation-wide and updated periodically. The Minimum Wage Commission composed of the social partners advices the Government on what the minimum wage ought to be, and the Government determines the amount taking into account this advised figure.
Social insurance: According to Turkish social security laws, self-employed & farmers, employees and civil servants have to register to Bag-Kur, SSK, and Emekli Sandigi, respectively. These are compulsory schemes.
Contribution rates for these schemes range between 35% and 40% of the contribution base.
The main risks covered by these schemes are old-age, disability/invalidity, health, maternity, mortality, orphanage, widow(ed), unemployment (for the employed).
Minimum retirement age for the new entrants is 58/60 (F/M).
Please have a look at http://www.csgb.gov.tr/ , http://www.ssk.gov.tr/ , http://www.bagkur.gov.tr/ , and http://www.emekli.gov.tr/ for further information.
Earthquake Insurance: Property is to be insured by the owner against the earthquake risks. It is compulsory and a national uniform tariff is implemented.
Motorists Insurance: If you possess a car, you are obliged to buy a motorists (traffic) insurance. The cost of policy depends on the cylindrical volume of the engine and the production date of the vehicle
1.7 OTHER INFORMATION
• Health Issues
There is a wide range of quality healthcare facilities including state/university/private outpatient/inpatient clinics, specialized hospitals, private medical doctor offices, medical laboratories and radiology centres, check-up centres, pharmacies. Service fees are significantly lower than those in Europe.
You can also buy private health insurance policies at reasonable costs.
• International and Intercity Transportation
Coach, railway, airline and cruising services for intercity transportation are available (for almost all big cities in Turkey).
Moreover, there exists international transportation access to some of the big Turkish cities.
Sightseeing, Hotels, Accommodation, other issues
Necessary information is available at http://goturkey.turizm.gov.tr/
• Religious Sites
Turkey has been the cradle of numerous civilizations for thousands of years and the birthplace of the three major religions: Christianity, Judaism and Islam. This fact alone, lends Turkey its unique and significantly valuable cultural and archaeological heritage. Because of its secular and democratic position, the Turkish attitude toward religion has been of tolerance. There are lots of facilities specific to Christians and Jewish people such as churches, synagogues, cemeteries, etc. in some cities. For detailed information please search for “churches Turkey” or “synagogues Turkey” on the net.
• Insurance Services
Almost all insurance products including health, life and non-life insurance classes are available in Turkey. The companies in the insurance sector are regulated and supervised by the Undersecretariat of Treasury.
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