GUIDANCE FOR FOREIGN NATIONALS

This is a guidance for foreign nationals who wish to buy immovable property (real estate) in Turkey.This guidance was prepared with the purpose of assisting foreign nationals to avoid problems in buying immovable property (real estate) in Turkey. However, the guidance should not be considered a substitute to necessary profesional consultancy service.

LEGAL BASIS

Real people of foreign nationality may buy property in Turkey if reciprocity exists between Turkey and the country of which they are citizens. Information on reciprocity lists can be obtained either from your country’s diplomatic missions in Turkey,or from the Turkish Embassy/Consulates General in your country.Real persons of foreign nationality are advised to take due notice of the following points in order to avoid incurring loss when buying immovable property.

OFFICIAL DRAWING UP OF CONTRACTS

According to effective Turkish legislation,official contracts transferring ownership of real estate must only be drawn up at the Land Title Registery Office where the immovable is located. It is possible also to sign,in the presence of a notary public,a”promise-to-sell”contract prior to the official sale. Acquisition of ownership of the immovable,the sale contract of which is concluded,can take effect only after registration at the Land Title Registery Office.

LEGAL RESTRICTIONS ON SALE OF REAL ESTATE TO FOREIGN NATIONALS

A. Foreign nationals may buy immovable property in Turkey,as a work place or private residence,provided reciprocity exists between Turkey and their country,and legal restrictions are observed.However,the total area of the immovables purchased by a foreign national may not exceed 25.000(twenty five thousand) square meters,even if the immovables are in diffrent localities.

B. Permission has to be obtained from the military authorities of the region,trough the Land Title Registry Office,before the purchase of an immovable. Sale to foreign nationals of immovable property located in a military security area is prohibited by law,and it is important to clarify this matter before any payment is made.

PRACTICAL INFORMATION

A. Real persons of foreign nationality should bring with them the following to Land Title Registry Offices when acquiring immovables; -Identity document or passport -Foreign nationals whose acquisition of property is subject to a valid residence permit:Residence permit issued by the relevant police department,

B. Before a real estate sale contract is drawn up,an inquiry should be made at the relevant Land Title Registry Office as to whether such immovable is subject to restricted real right,mortgaged,or ant other situation exists which prohibits its sale.

C. Foreign nationals who wish to buy real estate in Turkey are advised, -not to sign legally binding sales contracts or make any payments before obtaining information at the correct Land Title Registry Office about the immovable involved -not to initiate procedures before investigating the sales persons or agencies involved,and to refrain from conducting business with persons or agencies who are not able to provide sufficient proof of their credibility.In case of disagreement concerning the sale or purchase,the matter has to be referred to the judiciary,and a lawsuit has to be filed with the Turkish courts.It is not possible fort he Ministry of Foreign Affairs of Turkey and Turkish diplomatic missions to interfere in the judicial process.

WHY DO I NEED A TURKISH RESIDENCY PERMIT?

There have been a lot of discussion in 2012 regarding new laws about Turkish Residency Permits. A normal Turkish Tourist Permit now allows you to stay in Turkey for no longer than 90 days in any 180 day period.This leaves ex-patriots,and those that wish to stay for longer,are advised to apply for a little blue Turkish Residency book rather than take a one day visa trip out of the country to get their passports re-stamped. The goverment is trying to put a stop to those who are not officially registering in turkey (those avoiding paying taxes and illegal seasonal workers) Although applying for a permit is time consuming and a big hassle unless you know where to go and what to do. Since april 2011 the authorities reduced the cost of the permit making them more affordable.There are now companies advertising in local ex-pat newspapers willing to help and guide you trough the application process,check your paperwork and guide you around the various offices for a few hours to get necessary stamps and payments sorted if it is your first time applying for a residency and you have limited language skills, this small feel is often well worth the expensetheir services will undouptely save you a lot of time and unnecessary stress How long does Turkish Residency Permit last?

Residency permits in Turkey last for between 6 months and 5 years. Legal foreign seasonal workers are normally the only ones that apply and receive a 6 month residency visa assisted by the company they plan to work for in order to gain a work permit.Most ex-patriots apply for longer permits as there is little point going through the procedure again just a few months later.On first application,a 1 or 2 year permit is normally issued,for those renewing their book,up to a 5 year permit is possible.

The prices of residency permits vary and are dependent on the length of time applied for.For accurate information on costs it is best to check with your areas local passport police. To confuse matters,fees are quoted in Dollars or Euros,they do fluctuate depending on daily exchange rates, but as a guide a one year permit is normally around 60 Euros/$80. To renew permits,the same process applies but applications must be submitted within 14 days of the last permits expiry date. Turkish Kimlik(citizenship) can only be applied for after 5 years residency and additional conditions apply.

HOW TO APPLY FOR A TURKISH RESIDENCE PERMIT?

Make sure you have either employed the help of someone in the know,a specialist company,or done your homework before embarking on the residency application process.If going it alone,set out early and be organised. It is lightly to be a time consuming and frustrating process so be prepared to be patient, know in advance where to go, where the relevant buildings are, have a little understanding of the language to avoid headaches!

GUIDE TO THE TURKISH RESIDENCY PROCESS

Prepare the documents necessary in advance. You will need the following.
1. Six(Take eight just in-case) clear passport size photos on a white background.
2. Two copies of your TAPU/Turkish title Deeds or rental agreement stating where you live and how much you paid.(Also Take the original with you in case they ask to see it).
3. Two copies of your passport and the original(You need colour copies of the visa entry stamp and main details page,also ensure your passport is valid for the full duration you are applying for).
4. Your Turkish tax number (If you haven't got one you must visit your local tax office receive one).
5. Your residency book (if re-applying).
6. An offical plastic residency folder (Go to a stationary and ask for a folder residency application. It's just a simple normal plastic folder but they don't accept otherwise, get the correct one to save time!)
7. A bank statement proving you have sufficient funds to look after yourself whilst residing for the given period in Turkey. If you have a Turkish bank account you can ask them for a printed breakdown of funds in your accounts. Please Note: Goverment offices shut between 12.00 and 13.30 week days and are closed over the weekend. Start out early to avoid queues and avoid these times as nothing will get processed.

INVESTMENT FACTS

UK’s daily Telegraph has chosen the world’s 20 best countries for real estate investments. Turkey has entered the 5th place after a 78% increase in real estate acquisitions by foreigners during the first half of 2013. The top five included Barcelona,the French Riviera,Grenada,Toscana region and Turkey.

Turkey has established a policy of attracting high-added-value foreign direct investments (FDI) into Turkey to reduce the amount of imports and increase the competitiveness in its respective sector.

Turkey received USD 12.7 billion Foreign Direct Investment in 2013 Turkey is the 6th most visited country in the world. 35 Million Visitors in 2013 10.4 Milion people have visited Istanbul Turkey is in the top 10 medical tourism destinations. More than 250.000 people visited Turkey for health in 2012. Turkey is also amongst the top 10 wind energy producers in Europe.

Source: Investment Support and Promotion Agency

TAX

Turkish direct taxation system is established out of two main taxes; income tax and corporate tax. An individual is subject to the income tax on his earnings and income,in relation to a company which is subject to corporate tax on its earnings and income. The regulations of taxation for individual income and earnings are provided in the Income Tax Law 1960(ITL).Likewise, the rules related to the taxation of corporations are contained in the Corporation Tax Law 1949(CTL).Although each is governed by a different legislation,many regulations and provisions of the Income Tax Law also apply to corporations,especially,in terms of income rudiments and determination of net income.

TAXABLE INCOME

The income tax is charged on the income of individuals.The term individuals mean human beings.In the application of income tax,partnerships are not considered to be seperate entities and each partner is taxed individually on their share of profit.An individual’s income may consist of one more income rudiments listed below.

  • Business profits
  • Agricultural profits
  • Salaries and wages
  • Income from independent personel services
  • Income from immovable property and rights(rental income)
  • Income from movable property (income from capital investments)
  • Other income and earnings without considering the source of income
TAX LIABILITY

In general a residency criterion is employed in determining tax liability for individuals.This criterion requires that an individual who has his place of residence in Turkey is liable to pay tax for his worldwide income(unlimited liability).Any person who remains in Turkey more than six months in a calendar year is allegad as a resident of Turkey.However,foreigners who stay in Turkey for six months or more for a specific job or business or particular purposes which are specified in the ITL are not treated as resident and therefore,unlimited tax liability does not apply to them. Adding up to residency criterion,within a limited scope,nationality criterion also applies apart from of their residency status,Turkish citizens who live abroad and work for goverment or a govermental institution or a company whose headquarter is in Turkey,are considered as unlimited liable taxpayers.Therefore,they are subject to the income tax on their woldwide income.

Non-residents are only liable to pay tax on their income derived from the sources in Turkey(limited liability).For tax purposes,it is particularly important to determine in which circumstances income is deemed to be derived in Turkey.The provisions of Article 7 of the Income Tax Law deal with this issue.In the following circumstances,the income is assumed to be derived in Turkey.

TAX LIABILITY
  • Immovable must be in Turkey.
  • Rights considered as immovable must be used or accounted for in Turkey. Immovable property means real property which includes land buildings,and permanent leasehold rights.Ships,boats,aircraft and other types of transportation vehicles are also regarded as immovable property in the application of Income Tax Law. Income from imovable property comprises
  • Rental income occuring from the lease land,buildigs,and the rights to work mineral deposits,sources and other natural sources including mines,sand and gravel quarries,and property accessory to immovable property;
  • Rental income from property to immovable property which may be subject to independent leasing.
  • Rental income from the right to use any copyright of literary,artistic or scientific work,any patent,trade mark,design or model,plan,secret formula or process,or for information concerning industrial,commercial or scientific experince or for the use of or the right to use,industrial,commercial or scientific equipment
  • Rental income from the lease of ships,boats,aircraft ant the other transportation vehicles. In computing net income from immovable property,costs related to maintenance,management,renovation and running, and depreciation may be deducted from the gross income on the actual basis;it is also authorized to make a lump-sum deduction instead of actual costs,expect for the income from the lease of the rights mentioned above. In such cases,lump-sum deduction is 25 percent of the rental income.
PROPERTY TAXES

Property taxes are paid each year on the tax values of land and buildings at rates varying from 0,1% to 0.3%. In the case of the sale of a property a 1%levy is paid on the sales value by both the buyer and the seller.Property tax returns are filled in every four years and annual taxes are paid in two equal installements,the first being in March,April Or May and the second in November