How to buy property in Turkey
One of the most asked questions by our clients is the process to buy in Turkey. So, we here at Prime Property Turkey decided to take the time to list the process from step 1 to completion. We will include the amount of time necessary to spend with us during your search and the time with the attorneys and notary public.
1. Viewing & Reservation Process
The Prime Property Turkey website has hundreds of properties to choose from. Consider the lifestyle you need, your family size, budget, and proximity to amenities just to mention a few, and the Prime Property Turkey sales executives will help you buy the best property in Turkey. Once we find the right development (this can take 3-4 days), you will choose a specific unit and pay a reservation fee to the builder approximately 1,000 USD or 1% of the purchase price - most developers will take a major credit card (This is also refundable up to 14 days by Turkish law) – At this point, depending on the developer, you will be given either a sales contract or a reservation form. Each developer is different, so please understand this is not a standardized procedure here in Turkey.
2. Obtaining a tax ID
From there, the initial steps of moving forward with your purchase will be completed. First, we will help you obtain a Turkish Tax ID. (This process is quick and simple. Only a passport, home address, telephone number abroad, and mother and father’s name are needed to complete)
3. Opening a bank account
Once completed, we will take you to a bank of your choice to open a local account in your name. (Side Note: We only provide transportation and translation for the process. We by no means are given any account information or details). From this account, your monthly utilities will be deducted via an auto-draft system to make the transition easier to manage. Additionally, your rental income will also be deposited into this account should you be purchasing for investment purposes.
If purchasing for the Turkish Citizenship by Investment program, we will meet with an attorney of your choice. If you have not arranged an attorney prior to our meeting, we will arrange a meeting with one of our partner attorneys to discuss the procedure and timeline. While there, the attorney will explain the steps of the reservation to payment in full, as well as what your requirements are. (You can visit our Required Documents List on our Citizenship by Investment tab.) During this time, it would be wise to ask any questions you may have regarding the process, collect the fees and payment schedule, and present any challenges in yIf purchasing for the Turkish Citizenship by Investment program, we will meet with an attorney of your choice. If you have not arranged an attorney prior to our meeting, we will arrange a meeting with one of our partner attorneys to discuss the procedure and timeline. While there, the attorney will explain the steps of the reservation to payment in full, as well as what your requirements are. (You can visit our Required Documents List on our Citizenship by Investment tab.) During this time, it would be wise to ask any questions you may have regarding the process, collect the fees and payment schedule, and present any challenges in your record or family status that may have an adverse effect on your successful immigration application.our record or family status that may have an adverse effect on your successful immigration application.
5. Power of Attorney
The next step will be to issue a Power of Attorney (POA) (1 day). This is a particularly important step if you do not plan to be in Turkey throughout the process of the purchase. This POA allows your attorney to represent you for the relevant transactions of purchase and immigration (I.E. Purchase Agreement Signatory, Title Deed Registration, and lastly, to submit the residency and citizenship application on behalf of you and any included family members.) Please know that if you are submitting a family application, your spouse must also present a separate POA for the attorney to issue the immigration application on their behalf. The POA can be issued at notary public offices in Turkey as well as in Turkish embassies around the world.
6. Evaluation Report
After the POA has been completed and agreements have been reviewed and signed, the attorney will order an Evaluation Report for your records. This typically takes 3-4 days and has a cost of 1,250 TL. After the agreements have been reviewed and signed, the Evaluation Report will be ordered at this time. The whole process takes around 3-4 days to receive and costs 1,250 TL. Please keep in mind that these evaluations are independent of Prime Property Turkey and we have no influence over the final steps. This report will give you local comparisons, market value, permission, and build info, as well as any deficiencies found throughout the process.
Once these steps have been completed, and only after these steps have been completed, you can travel home to pay the remaining balance from your local bank via wire transfer.
(Note: For Citizenship by Investment Applicants - It is important that the account is in your name only. As any other account holders will be considered shareholders on the property and increase the amount needing to be invested for citizenship.)
ONCE-OFF COSTS of buying property in turkey:
Stamp Duty (title deed transfer tax) is 4% of the purchase price, this is traditionally split between you and the developer, though not always. This is to be paid upon completion and possession of the unit, however, some units do ask for it immediately for early issuance of the title deed if seeking Turkish Citizenship by Investment.
VAT (value-added tax, like a sales tax) of 1%, is usually included in the purchase price but is a separate fixed cost.
Setup of natural disaster insurance or in Turkish DASK – Maximum 3,000 TL. Utility accounts - water, electricity, and gas. Deposits are given to the servicing utility companies and initial set-up fees are required. This amount is no more than 3,500 TL on average. These deposits will be returned when the property is sold, or you have leased to a tenant and utilities have been obtained in their name.
ANNUAL & MONTHLY COSTS of buying property in turkey:
● How much is Property Tax in Turkey?
Annual Property Tax is due for all properties (emlak vergisi) in Turkey. This tax differs between a 0.1% and 0.6% rate depending on where you own the property and the type of property. For example, if you own an apartment in Istanbul, you will be subject to the higher city tax of .2% calculated by the value of the property. The value is calculated based on nominal value and is calculated by the local council. The nominal value is usually less than the market value.
Property tax returns are filed every four years. This tax is calculated based on the property’s facilities and the size of the plot in square meters. The rates are doubled for a property in major urban areas such as Istanbul. Property tax is paid directly to local municipalities (belediye) in two installments each year. The first installment is due between March and May while the second one is due in November although it can be paid in a lump sum with the first payment. Payment can be made at banks, by check, online, or in cash at the local municipality.
* If the tax is not paid on time, the owner of the property pays a penalty fee of approximately 2.5 percent of the amount each month.
Upon sale of property, owners are legally required to pay a property transfer tax, which is paid on the basis of the actual sale or purchase price of the property. The sum of approximately 1.5 percent of the value of the real estate needs to be paid by both parties on registration of the transaction at the Land Registry. Prime Property Turkey is here to help every step of the way.
● Property maintenance Fees
Maintenance for property varies from development to development, but the average is about 4-6 TL/ m2 - (If rented, the tenant will assume the payment of these fees). For more information on annual costs please refer to our blog on estimated annual costs of property maintenance
Income tax on Turkish homes
Income is levied on all owners in Turkey. It is levied from the home earnings. Rental income can be determined by either the actual deduction method or the lump sum method. The actual deduction method is when expenses including water expenses, lighting, insurance, and depreciation cost from the rental income are deducted. Under the lump-sum method, taxpayers deduct 25% of their gross income to arrive at a taxable income.
Capital gain tax on Turkish homes
This is what you pay for an asset’s appreciation during the time you owned it. In Turkey, the capital gain tax is paid when you sell your house within the first 5 years of purchase and if you sell it 5 years after purchase, you are exempted from paying it. This amount is calculated as a percentage of the profit you make between the stated value of your property when you first bought it and the sale price you declare at the Land Registry (Tapu Office) when you sell.