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Real Estate Acquisition Phase

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.

Who Can Own a Property in Turkey?

  • Everyone except the citizens of Syria, Armenia, Cuba, North Korea, Nigeria, and Yemen can get property in Turkey provided that the total area of 300,000m2 per person.
  • One foreigner can acquire real estate of up to 10% of the total area of the neighborhood.
  • Foreign investors need to apply to land registry offices in Turkey to get approval for purchasing the property.
  • During the property investment stage, there is no discrimination between foreigners and Turkish citizens.
  • After the real estate is acquired, there is no difference between Turkish citizens and foreign nationals in taxation applications.
  • There is no difference between the acquisition of commercial real estate, such as factories, warehouses, plazas, shops, shopping malls, offices, and seaside villas.
  • Foreigners who have invested in and acquired the Real estate can transfer it to their legal heirs through inheritance if they are not citizens of the following countries; Syria, Armenia, Cuba, North Korea, Nigeria, and Yemen.
  • The property located in the military areas and security zones are only open to Turkish citizens and cannot be transferred through inheritance to foreign nationals.
  • If the real estate property inherited is more than 10% of the total surface area, the heir must sell the property to a third party within a year. Otherwise, the property is put up for sale by the Ministry of Treasury and Finance, and the amount is given back to the heir.
  • To find a property in Turkey, you need to get in touch with real estate consultants in Turkey like Bari Global, who can provide you assistance throughout the process of and after buying.
  • The property price in Turkey is evaluated regarding the quantity and quality with the signature of three independent experts. Secondly, many consultant companies are showing real estate prices per square meter in every neighborhood.
  • The foundations of land registry systems in Turkey were laid by the Ottoman Empire. And they have been used since they originated and are updated within the line of today's technology.
  • Since Turks prefer real estate as a traditional investment tool, they need to use systems that are secure and robust.
  • The land registry records are kept in public systems, and information on the legal status of immovable property is recorded in physical books and computer systems called TAKBIS.
  • Before the real estate acquisition process, it is significant to have information on the legal status of the property to predict the possible legal risks. The issues which require information are;

Real Estate Evaluation

It is crucial to investigate whether the seller is the real estate owner in the land registry system by examining the property details.

Mortgages on Real Estate

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

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.

Zoning Status

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.

Construction and Occupancy Permit

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.

Current Physical Status of Real Estate

Before a property acquisition decision, it is important to visit the property and know its current condition.

Purchasing Agreements

There are two types of purchase agreements;

  • Purchase\Sales Agreement

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.

  • Sales Promise Agreement

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.

Payment Options for Real Estate Acquisition

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.

Power of Attorney for Real Estate Acquisition

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:

  • The signatory’s photo should be in the power of attorney.
  • Signing, sealing or stamping the photo by the authority that issued the power of attorney.
  • Preparing the attorney power in the official language of the country of issue
  • Notarization and apostille of power of attorney by the notary
  • For the power of attorney to be binding, it should be translated by a notarized translator in Turkey.

Property Ownership Law and Management Plan in Real Estate Acquisition

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.

Tax Number in Real Estate Acquisition

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.

Major Taxes in Real Estate Acquisition

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.

Title Deed for Real Estate Acquisition

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.

Value Added Tax in Real Estate Acquisition (VAT)

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;

  • Turkish citizens, having work or residence permits and living abroad for more than six months
  • Foreign Nationals residing in Turkey
  • The legal entity does not have business centers and is not generating income through a workplace or a resident representative in Turkey.

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.

VAT Rates in Real Estate Acquisition

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.

Valid VAT Rate for Sale of Real Estate

  • Real estate sales are paid to tax officials by paying 18% VAT on sales. Apart from this, it is applied at 1% and 8% rates under specific conditions. For example, less than 150 sqm properties are suitable.
  • Houses larger than 150 square meters are subjected to 18% VAT, temporarily lowered to 8% in Turkey.
  • Houses built with a building license after 2017 and are less than 150 square meters within the metropolitan municipality boundaries are subject to the VAT rate of 1% only for those with a land area of fewer than 500 liras.
  • Today, 8% VAT is calculated on house sales, having land square meter values over 1000 lines and are smaller than 150 square meters. However, from 2020 the real estate sales will take place with 18% VAT instead of 8%.

Stamp Tax in Real Estate Acquisition

  • Stamp Tax is received from legal and official papers documenting transactions between people and institutions in Turkey.
  • A stamp tax of 0.948% is put on the highest monetary value regarding the contract signed in Turkey.
  • Stamp tax is not taken in sales promise contracts and is also not collected from the prepaid actual sales agreements.
  • The calculation of the total rent period in the contract is done and not on the general stamp data rate; a total of 0.189% stamp tax is collected on the rent.
  • If there is no engagement in any commercial activity, there is no stamp duty on the signed agreements.
  • Parties that sign the contracts are held responsible for the stamp duty, and the official deed signed in front of the land registry officer for the property purchase or sale is not exempted from stamp duty.

Processes Before the Title Deed for Financing

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

  • After signing the pre-contract form, it is crucial to sign the loan agreement within a reasonable time alongside the payment plan and other loan documents.
  • After the documents are signed, the financial institutions must prepare the collateral.
  • This process takes an average of a week, provided that the complete documents are submitted.
  • After the appointment date, the first-degree mortgage on the real estate is established, subsequently determining the registration of the land registry in the title deed office.
  • The financial institution that forwards the loan amount to the sellers' bank account for real estate acquisition.

Turkey Real Estate Options to Invest

Turkey property alternatives come in a wide range of architectural approaches, unique designs, and social facilities. And various apartment, residence, penthouse, villa, and other home options are as close as a phone to you with Bari Global now!