Today Turkey, which is the 17th biggest economy in the world, harbors great expectations for the next decade such as becoming one of the world’s top 10 economies and making Istanbul a finance capital. These targets have in their core the construction and real estate sectors and Turkey has already taken giant strides towards its targets. Turkey, which has succeeded in becoming one of the rare countries that received “investable” rating from international rating agencies in recent years, also manages to maintain stability in the real estate sector.
Istanbul, one of the most favorite cities of last year, continues to be the most popular destination for future development opportunities at rank 7 among the best 10 cities. Therefore, primarily Istanbul and many other Turkish metropolitan cities have a serious investment potential with regard to the real estate market when compared with the European metropolitan cities.
Can foreign real persons acquire real estate?
Foreign real persons, who are citizens of the countries that have been announced by the Council of Ministers (except for Syria, Armenia, Cuba, Israel and Cyprus) are entitled to acquire ownership rights in Turkey. In any event, the total size of land cannot exceed 30,000 sqm for each person. In addition, foreign real persons are only entitled to acquire real estate up to 10% of the total surface area of the relevant district. In order for a foreigner to officially understand whether or not she/he can acquire a specific real property, the prospective buyer must apply to the relevant land registry office for approval. The acquisition can be performed upon the issuance of the relevant land registry’s approval.
Is there a difference between the procedures to be applied for o fee and villa or apartment/condo acquisition?
Transactions involving acquisition of office and villa or apartment/condo are subject to the same official procedures.
Is there a different tax treatment for property transactions in Turkey between Turkish taxpayers and foreigners?
In principle there is no difference between Turkish residents and non-residents for property acquisitions for taxation purposes. Foreigners are subject to the same rules with the Turkish citizens/residents.
Is it necessary to hold a tax number to acquire a property?
A tax number is requested from the buyer at the time of the property acquisition before the land registry. A foreign real person may obtain a tax number by applying to any tax office, together with a copy of his/her passport (translated and certified by a notary public).
What is “Title Deed Fee”? How it is calculated and paid?
“Title Deed Fee” is calculated according to the “Fee Law” for the transactions concluded at the title deed registry such as property buying/selling, registration of rental contract, annotations of any transaction made at registry etc. At the time of acquisition, title deed fee at the rate of 2% is applicable over the sales price for buyer and seller separately. Fee has to be paid to the tax office before the transaction made at the registrar.
What are the VAT rates to be applied for property acquisitions?
General VAT rate in Turkey is 18% and this rate is also applicable for the property sales. In principle property sales including office, residential properties, land acquisitions etc. are all subject to 18% VAT which is calculated over the sales price. But, there are different VAT rates set for the residential properties full filling some specific conditions.
What are the VAT rates specific to residential property sales?
In addition to normal VAT rate at 18%, rates at 1% and 8% are also applicable for the residential units having net area less than 150 sqm with some additional conditions. Tus, we strongly suggest consulting your advisor for the exact VAT rates for a residential unit less than net area of 150 sqm. Please note that residential units having a net area of more than 150 sqm and all other properties in Turkey are subject to 18% VAT as mentioned above.
HOW TO RENT YOUR INVESTMENT ?
Is it possible to obtain a residency permit after acquiring a property?
According to the “Law on Foreigners” and “International Protection”, foreigners who have acquired property in Turkey are entitled to apply for a short-term residency permit. Short-term residency permits are granted for one year for each application. The applicant is required to declare a residence address when filling out the forms.
How to start using the utility services?
The owner of a property may only apply for subscription of the utility services (such as electricity, water and sewage system connection) following the issuance of the building utilization permit. Accordingly, if the building utilization permit is in place, following the acquisition or leasing of the property, the new owner or tenant must apply to the relevant institution, and should execute an agreement regarding usage of the relevant utility service. The new owner or tenant can use the utility services following the execution of the utility service agreement, and after making payment of the subscription or deposit fee
Should I charge VAT to my rental income?
No. Rental income obtained by individuals who are not dealing with any commercial activity or from the properties that are not part of the enterprise are not subject to VAT. So, as an individual lessor you will not charge any VAT.
What are the facts and Figures about Turkey?
- Istanbul is the 5th most favourable city in the world, 3rd most favourable city in Europe.
- 6.5 mln residential units are expected to be regenerated in the next 20 years, an industry of USD 400 bn.
- Economical growth 9.2% and 8.5% in 2010 and 2011.
- Turkey is visited by 34 mln tourists in 2013.
- Istanbul, as the financial centre of Turkey, has a growth potential of additional office development.
- A population of 75 mln 50% under age 30.
- Up to 400 point direct flights from Istanbul, 22 direct access to the capital cities within 2 hours.
- 500,000 housing sales annually in Turkey.