According to the official data of the Turkish Statistical Office, in 2019, a record for sales of real estate to foreign citizens was recorded. It amounted to about 45,000 objects. The beginning of 2020 was also marked by strong sales. However, the situation with the coronavirus had a significant impact on the real estate market.
Nevertheless, the number of buyers is already on the rise, and foreigners continue to show their interest in Turkish square meters. And there are many objective reasons for that. Low cost of housing, excellent climatic conditions and ecology, excellent quality of construction and materials, high liquidity, the ability to get there at any time of the year to the country – all these and many other factors make people invest in real estate in Turkey.
Registration of Real estate in Turkey
When buying Turkish real estate, a foreign investor will go through the standard stages of the acquisition procedure. Namely:
- Stage 1 – A preliminary estimate of your budget and the choice of an object;
- Stage 2 – Acquaintance with the real estate agency;
- Stage 3 – Conclusion of a purchase and sale transaction;
- Stage 4 – TAPU design.
Before you start looking for housing, you should clearly define for yourself which living space suits you best. In such a case, there are no insignificant points since these are fundamental factors that will affect the comfort of living in the future. Pay special attention to the location and proximity to the sea coast, to the area of a house or apartment, floor, availability of infrastructure nearby, public transport, environmental friendliness of the area, etc.
Having decided on the general presentation and characteristics of the living space, figure out how much you are willing to spend on a purchase. It will be enough to know the approximate amount. After that, start monitoring real estate websites. Here it is important to choose only trusted agencies with positive customer reviews, extensive work experience, and a catalog of objects.
Having chosen one or several options, feel free to contact the real estate company for advice. Good agencies provide potential clients with the most complete information, explaining all the details of the acquisition. Besides that, many of them are ready to offer exclusive services, such as a free study tour of the objects they like. Thus, a trip to Turkey is organized, where the agency employees meet a potential investor and show one the accommodation, which makes it possible to finally choose the most suitable option.
As soon as the buyer makes the final decision, the agency’s employees start preparing for the deal, collecting the necessary documentation, agreeing on all the nuances of the sale with the seller or developer. To conclude a contract, the buyer only needs to have a passport and money if one does not resort to installments or mortgage lending.
The certificate of ownership is drawn up within a few days at the Cadastral Department. The buyer becomes the legal and full owner of Turkish real estate.
Taxation & Tax Costs When Buying an Apartment in Turkey
When purchasing square meters abroad, it is important to understand that the cost of an apartment is only part of the cost since then the owner will have to pay the fees and maintain it. The real estate tax in Turkey for foreigners is significantly less than in most European countries.
The tax rate on housing in Turkey depends on the popularity of the locality. So the higher it is, the more the tax is. Antalya, Istanbul, Izmir, Bursa, Adana, and Konya are in high demand among local residents and foreigners in Turkey. The presence of real estate in Turkey is considered a sign of a citizen’s wealth. Therefore, it is subject to taxation. In general, there are several fees in the republic, which are important for future owners of Turkish houses and villas to know about.
Property Purchase Tax in Turkey
At the stage of concluding a sale and purchase transaction, both parties are required to pay a tax to the state treasury in the amount of 4% of the value of the housing specified in the certificate of ownership. Property tax in Turkey upon purchase is paid at one of the banking institutions in the Turkish lira. As a rule, these costs are paid by the buyer himself. In some of the resort regions of the country, sellers are often guided not by the market but by the cadastral value of housing when submitting a package of documents to the Cadastral Department.
In addition, according to the new rules of Turkish law, there is another payment for the services of the state examination of the appraisal of housing. An independent expert comes to the selected object and estimates its real value. Real estate appraisal costs the buyer around 1,200 TL.
Annual Property Tax in Turkey
After the official registration of the property, the owner pays the state property tax every year. Its amount is determined based on the type of real estate and can range from 0.2 to 0.6% of its price. Tax rates differ for residential, commercial property, land plots for buildings, etc. If the technical passport of the object has not yet been issued for the constructed premises, then the owner pays the tax as for a land plan for construction.
Tax payments can be made either once a year or twice, dividing the amount into two equal parts. The easiest way is to contact the cash desks of the city municipality locally or pay through the official website of the city administration. There are penalties for late payment.
Property Sales Tax in Turkey
The law on the sale of real estate in Turkey provides for a special payment by the seller. However, if the owner sells only one living space per year and one’s income does not exceed $ 3,000, then the tax is not required. Residential property sold after five years of purchase is also exempt from duty. If one owner sells two or more apartments per year, the state authorities quote this as a commercial activity, which means that the tax on the sale of housing will be 15% of the cost.
Government Fees for the 2nd Registration of Ownership & Lease
If the owner of the living space decides to transfer it by inheritance or as a gift, one will need to pay state tax. The donation fee is approximately 10-13%, and the inheritance fee is 1-10%. The amount of taxation depends on the price of real estate.
The tax rates on income from renting apartments range from 15 to 40%. The highest percentage is accrued if the income from the rental of housing by an individual is more than $ 100,000. If the agency (that is, a legal entity) is engaged in renting, then the tax is 20% of the profit.
Rental income tax is not payable if the total amount is not more than $ 1,100 per year for residential properties and not more than $ 8,000 for commercial spaces. And in fact, we are talking about long-term lease objects. Short-term renting of apartments is subject to 10% VAT.