There are regulations and things to consider before your investment. The current physical status of real estate is one of those titles. These are followed by legal procedures. Purchasing, payment options, sales promises, and the services of power of attorney are critical.
To work in peace, you should consult the ones who have been in the sector; and follow the new legal regulations. As Bari Global, we have the network for every possible need, and our officers and lawyer partnerships work together with fast results.
These fast results are not only for real estate investment processes but also applicable to getting Turkish citizenship. A process with more governmental communications, but we work in order and promise our investors their Turkish ID in 60 to 90 days, most often without their physical presence in Turkey.
It is crucial to investigate whether the seller is the real estate owner in the land registry system by examining the property details.
It is significant to investigate the standing debts before investing in a property by examining the deed records.
Annotated rights like the easement and commitment need to be checked whether there is no annotated right. It will be easier and legal to transfer the property without any forbidden risk or restrictions.
Cadaster Records determine the places, area, borders, values, and legal status of all land, terrain, and properties in the country by the state. It is important to note that the property boundaries in the cadaster match the property boundaries specified in the zoning plans.
The activity which is allocated to the purchased property should be used only for that purpose. For example, if the zoning status is registered for residential use. It cannot be used for commercial purposes.
To build a new building or make changes to the existing one. It is necessary to obtain a building and occupancy permit from the relevant municipality. The permit confirms that the building was built within the set guidelines and with a construction license. If the building is built without a construction or occupancy permit, it can be demolished by the authorities, and the owner may be faced with penalties.
Before a property acquisition decision, it is important to visit the property and know its current condition.
There are two types of purchase agreements;
According to the law, the property sale is only realized under the presence of the seller, buyer, and land registry.
The direct acquisition can be realized with the participation of people issued sales and purchase power of attorney. Besides, the seller and buyer need to sign a standard transfer document prepared by the land registry.
If you buy a property that is under construction, it is crucial to know if the owner is competent enough to finish the work.
The buyer-seller needs to sign a preliminary sales promise agreement before purchasing the real estate, and for this agreement to be valid, it needs to be signed by a notary public.
To prevent third-party claiming on the property, it is significant to have a sales promise agreement to be registered in the land registry. The sales promise agreement is valid for up to 5 years.
The purchase price can be made through cash, bank transfer, or a blocked cheque. Bitcoin payments through the bank are also accepted but with a certain amount of commission.
Foreign investors themselves or their legal representatives can carry out transactions related to the real estate acquisition process. Purchases made with a power of attorney should be organized and prepared by a notary public.
The power of attorney, carrying out the processes on behalf of the investor, should be signed in the presence of a notary public. If the attorney power is made abroad, the investor needs to follow these transactions to make it legal in Turkey:
Management and operation of the main structure and common areas are regulated by the municipality where the real estate is located. And it is within the agreement between owners of condominiums.
It includes provisions passed to condominium owners and their heirs for adherence to the terms of the management plan. The management plan also includes the rights and obligations of the parties living in the same real estate project, counting the purpose of use by establishing the rules of general management such as property management operations and supervision, maintenance, and repair.
The provisions of the management plan apply if they are under the Property Ownership Act. The provisions of the management plan, preventing or replacing the mandatory provisions, listed in the Condominium Law, cannot be made.
The condominium owners' board consisted of natural memberships of condominium owners responsible for managing common areas and have the right to participate in the management of the whole building according to the Law on Ownership.
Every person has a right and obligation arising from the Property Law and Civil Law for other people involved in the same real estate project.
For the real estate acquisition process to begin, foreign investors need to have a tax number. Foreign nationals can go to any tax office with their passport, translated and approved by a notary public to obtain a tax number.
Real estate acquisition transactions by individuals in Turkey: ‘Value Added Tax’, ‘Stamp Duty’, and ‘Notary Costs’ are required to be paid as some tax treatment. Notary Costs constitute an expense item in the performance of the operations. Various capital gains are taxed in Turkey, and to own real estate, Real Estate Tax is a mandatory payment of a wealth tax. If the investor rents out the acquired real estate property, the income tax should be paid by mentioning the rental income.
The Title Deed fee is taken to be realized in the title deed registry, such as real estate acquisition and sale processes, registration of rental contracts, and annotation of all transactions made in the land registry records.
The Title Deed fee had been reduced to 1.5% until 31st December 2019. And from January 2020, it will be realized in the purchase and sale of housing and business, taking a 2% title deed from the buyer and seller separately. The Deed fee is calculated over the sales price and should be collected separately from buyer and seller, paying to the tax office before dealing with the registrar.
All kinds of real estate sales transactions for Turkish Citizens in Turkey are subject to Value Added Tax, and so are the land and workplace sales assessed and taxed similarly.
The VAT is exempted under these situations;
Foreign legal persons, with the VAT exception for such transactions, tax exemption only in cases where the real estate transfer fee to be brought to Turkey is paid in foreign currency. It is also expected not to sell the property from the investor for at least a year after acquisition for tax exemption.
If the property is sold within a year of acquisition, VAT must be paid to tax authorities with late payment interests.
If the person does not conduct the business, namely any commercial profit from the purchase or sale of the real estate, VAT exemption is applied regardless of whether the sale is made to the real or legal entity. And the transactions are carried out without VAT.
The VAT rate applied to essential commodities and services is 18% in Turkey, and this ratio is considered an obligation for real estate sales.
Under different conditions, different VAT rates are required for real estate sales.
Three stages need to be completed before the title deed transfer:
Stage 1- Appraisal
Once the applications are approved by financial institutions for real estate acquisition, the appraisal is required to determine the property value to check its legal status.
Issues such as identification of the real estate, its condition, and suitability for the intended purpose are among the things that should be taken into consideration for the appraisal. The financial institution realizes the appraisal, and it is finalized within a few days.
Stage 2- Pre-Contract Information Form
After the appraisal, the pre-contract is signed. The form contains the loan amount, payment schedules, interest rates, principal amount, monthly installments, and other fee information.
Stage 3- Signing of the Loan Agreement
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