TABLE OF CONTENTS
- About this Guide
- Information you’ll need when buying a second-hand property in Turkey
- What if it is a new property rather than second-hand?
- Vendors’ legal and financial obligations towards buyers
- The Preliminary sale-purchase contract
- The ‘Tapu Senedi’ or Property Deeds
- On what basis may a contract for purchase be legally withdrawn?
- What fees, taxes and charges do I pay when buying a property in Turkey?
- Obtain a Temporary Tax Number
- Property Taxes in Turkey
- KDV (VAT)
- Capital Gains Tax
- Property Management Costs
- Other Charges
- Getting a valuation of the Property
- Checks on the Land Registry
- The Public Notary
- Inscription of your New Title on the Land Registry
- Removal of the Previous Mortgage from the Registry
ABOUT THIS GUIDE
Welcome to the Advocate Abroad® guide to purchasing a property in Turkey!
This property guide will give you an overview of the conveyancing process in Turkey, including information on both your and the seller’s legal rights and obligations as well as pitfalls to avoid.
Of course, no guide can take the place of independent legal advice. Throughout this guide you will find customer reviews of the Advocate Abroad English-speaking lawyers in your area of Turkey.
Advocate Abroad® is a unique network of independent English-speaking lawyers, accountants, architects, translators and financial service companies in Turkey.
You are guaranteed that all of the officially registered and regulated professional members of the network conform to strict protocols and standards for legal services, which are overseen by a legal professional in the UK and member of the Chartered Institute of Legal Executives (CILEX).
Now, on with the guide!
WHAT INFORMATION DO I NEED BEFORE BUYING A SECOND-HAND PROPERTY IN TURKEY?
There are a number of legal issues that need to be considered when buying a property in Turkey. In particular, when facing a Property purchase the vendor is legally obliged to provide the following documentation:
- Land Registry Document of the property or information regarding the village / neighbourhood, island, plot, building, independent section of the property
- Identity document or passport (with translation if necessary)
- Obtaining the “Real Estate Fair Value Certificate” of the real estate from the relevant Municipality
- Real Estate Valuation Report
- Compulsory earthquake insurance policy for buildings (residential, business, etc.)
- 1 photo of the seller and 2 photos of the buyer (in the last 6 months, 6×4 size)
- If there is a party who does not speak Turkish, sworn translator
- In case of a transaction with a power of attorney issued abroad, the original or certified copy of the power of attorney with its translation
In addition, the buyer should be careful to confirm the following:
- Name of the current owner of the property
- If there is any mortgage or other charge over the property
- The physical property conforms to the description
- That the land is correctly zoned for building
- The buyer should also make sure there are no sitting tenants in the property
AND WHAT IF IT IS A NEW PROPERTY?
Before buying a new property it is advisable to confirm the following:
- The existence of a project license in which the relevant technical department confirms that the building project has been carried-out in accordance with the original approval originally issued by the town hall.
- That the license of first occupation has been issued.
- The certificate of habitability of the properties should be available.
- Inscription in the property registry of the urbanization along with the necessary insurance for purposes of dealing with any defects in the building work.
- That any sums advanced (via instalments) for the purpose of purchasing a property ‘off-plan’ are protected by bank guarantee.
WHAT LEGAL AND FINANCIAL OBLIGATIONS DO SELLERS HAVE TOWARDS THE BUYER?
The vendor of the property has the following legal obligations:
- To conserve the property until it is handed over to the purchaser.
- Transfer the property.
- Make good certain defects or deficiencies in the property.
- To pay certain costs and taxes.
If there are any defects in the property known to the seller and which may have not been communicated to the buyer, the buyer may possibly rescind the contract or claim damages instead. There is a six month time limit, from the date of purchase, in which to exercise this right.
Unless there is agreement to the contrary, the purchaser is obliged to pay the costs relating to the drawing up of the deeds of transfer as well as those costs necessary to effect the transfer of the property – this would include notary costs. Any capital gains tax that is due will be payable by the vendor.
WHAT IS A PRELIMINARY CONTRACT?
Assuming that all of the preliminary checks determine that the property is as stated and can be purchased safely, the purchaser may need some time to put together the funds necessary to complete the purchase.
The Turkish property purchasing process provides for this by use of a ‘preliminary’ or ‘deposit’ contract. Effectively this is a contract-to-contract and normally stipulates that before a stated future date, the property will have passed from the seller to the buyer.
Should the vendor fail to complete, the buyer possesses the right to claim a deed cancellation and registration by means of a lawsuit.
WHAT IS A TAPU SENEDI?
The final contract or ‘tapu senedi’ as it is known in Turkish is when the title of the property passes and the buyer’s new title may be registered in the local property register. The signing takes place in the office of the public notary who is a type of official registrar who must witness the contract signing in order for it to be legally binding.
On the day of the signing all interested parties meet in the office of the notary – this may include a representative of the bank if a mortgage is required.
The deed is read aloud by the notary and the parties then present their identification after which the deeds are signed by the vendor, the purchaser and the notary. At this point the monies for the purchase are handed over in the form of a bank-guaranteed cheque.
WHEN MAY A CONTRACT FOR PURCHASE BE LEGALLY WITHDRAWN?
The reasons for which a contract may be rescinded are normally included in the contract itself in order to protect the parties to the contract. The following would however be the main reasons for rescinding a contract for the purchase of property:
- Failure to fulfil obligations under the contract.
- Loss of the property.
- Failure to pay.
- Hidden charges (over the property) or defects.
WHAT FEES, TAXES AND CHARGES DO I PAY WHEN BUYING A PROPERTY?
Whether you are buying property in Turkey -or selling a property- there are a number of costs associated with the process. A number of these you will expect if you have been through the process in another country, but some you will not. In this guide the main charges will be covered and the party that is usually responsible is the buyer (unless otherwise indicated).
However, it should be borne in mind always that the concept of freedom to contract is a cornerstone of Turkish law and the parties may always assume whatever responsibilities they wish with regard to payment of the costs and taxes incurred when transferring property in Turkey.
OBTAIN A TEMPORARY TAX NUMBER
Before being able to do, well almost anything in Turkey (and certainly to purchase a property) you will need to arrange a temporary tax number. This is arranged either at the Turkish Consulate in your country of residence or in Turkey at Tax Offices.
It typically involves arranging an appointment date at the relevant location, nowadays often over the internet and then queueing with others who get the same date to firstly get a copy of the form that needs to be presented at a nearby bank to pay the administrative cost and then return to present your identity documents and proof of payment.
A proof of the purpose will be required to obtain the Temporary Tax Number, such as buying a particular property in Turkey.
A Temporary Tax Number may also be arranged by your legal representative upon completion of a power of attorney or similar document. Advocate Abroad offer this service.
PROPERTY TAXES IN TURKEY
While Turkey’s south coast has plenty of sun, sand and rakı, the fact that property taxes here are very low often goes unnoticed! In any case, there are some taxes and here we highlight the principal property taxes in Turkey that you are likely to come across when buying a property. In general the principal taxes or charges in Spain can be grouped as follows:
- KDV (VAT)
- Council Tax (Emlak Vergisi)
- Capital Gains tax
- Community Charges
- Other Charges
Purchases within the scope of commercial, agricultural, professional activities, of a new property in Turkey currently attracts a VAT or sales tax rate of 1% until 150 m2 , for the purchases above 150 m2 the VAT is %18. In other words, the VAT won’t be payable in the case of a purchase of private, residential property.
PROPERTY TAXES (EMLAK VERGISI)
This is a charge that is similar to Council Tax or rates in the UK. It is normally payable once a year (occasionally it is billed quarterly) at the ‘”emlak vergisi” or town hall which is payed twice-a-year in Turkey.
Care should be taken when buying a property given that the purchaser should pay for only those months of the year that they own the property. If the previous owner has paid for the full year then they may claim return of that portion which they will not use.
The amount payable is expressed as a percentage of the ‘cadastral’ value of the property. The cadastral value is the value of the property expressed in Turkish Liras as appears in the cadastro registry.
This registry is like a census of all properties in an area and the value the registry attributed to a property is taken as a reference when determining certain local administrative issues.
Once the cadastral value is determined, the tax payable is calculated by multiplying the cadastral value by a coefficient or percentage. For urban property this oscillates between 0.4% and 0.6% depending on the type of property and whether the property is located in the metropolitan municipal area.
CAPITAL GAINS TAX
This is a tax payable upon income derived from the sale of property. This tax is payable on the increase of the value of the property as compared to when it was bought.
The capital gains tax is calculated according to the Domestic Producer Price Index (D-PPI) that changes annually.
Pursuant to Article 80 of the Income Tax Law, if the real estate is sold “within 5 years” from the date of purchase, it will attract capital gains tax for the increased balance which is the capital gain.
PROPERTY MANAGEMENT COSTS
Article 20 of the Law of Property Ownership sets forth that unless agreed otherwise between each owner shall bear the following according to his/her share:
- The expenses of the caretaker (janitor), heater, gardener and guard and the advance to be collected for them;
- The insurance premiums of the main building and other expenses such as maintenance, protection, strengthening and repair expenses of all common places and administrative pension;
- Note that the owners cannot avoid paying this share of expenses and advances by giving up their right to use on the common place or facilities or claiming that there is no need or need to benefit from them due to the situation of their independent section.
Enforcement proceedings can be filed against any owner who does not pay the expenses or advance share, by each of the other owners or by the manager according to the management plan, according to the Law of Property Ownership and general provisions.
Any owner who does not pay the full amount of the expenses and advances is obliged to pay compensation with a monthly account of five percent for all days during which the payment is delayed. If the expenses are caused by damage caused by one of the owners to any common area of the building, any other owner or the beneficiary of any of its independent sections, and those who participate in the expense have recourse rights to those who cause that floor or expenses.
In addition to the main taxes and charges outlined above it may be necessary to make provision for other ancillary charges such as rubbish collection and water rates.
If a community charge is being paid then this will most likely include the charge for collection of rubbish but if the property is a separate building such as a villa in its own grounds, then such charges are paid separately.
VALUATION OF THE PROPERTY
This will usually be a requirement of the financial institution that may issue the mortgage although they will insist that you, the buyer, must pay.
The person carrying out the survey must be certified by the SPK and BRSA (Banking Regulation And Supervision Agency licensed companies are listed on BRSA) and SPK’s sites https://www.spk.gov.tr/SiteApps/EVeri/Detay/gds
- Not all surveyors or survey companies charge the same.
- Where the property is located.
- Will the surveyor need to charge expenses (mileage etc) to reach the property.
- Does the surveyor need to access technical information (plans etc).
Ultimately, should be obtaining a local mortgage, the financial institution providing the loan will have to accept the surveyors report and so you will most likely use one recommended by them.
CHECKING THE LAND REGISTRY
To ensure that the particulars of the property are correct i.e. the identity of the current owner(s), the mortgage charges and any other encumbrances that currently exist on the property and the existence of any court judgments affecting the property etc, it is necessary to check with the land registry at the local town hall where the property is located.
While strictly speaking it is legal to arrange for the transfer of a property in Turkey via a private legal contract, this is not the typical, nor the recommended way of doing so.
This is because for any new property title to be registered in the public Land Register it is necessary to complete the transfer of the property by public deed or tapu müdürlüğü’. Failure to register the title would permit an unscrupulous vendor to sell the property to a third party who, upon registration of their title would be entitled to retain the property, while you – the poor earlier purchaser – would be left chasing repayment from a (probably) long-gone seller.
Also, failure to register a purchaser’s new title on the Land Register and thereby remove a prior title would allow the possibility of embargos being placed on the property due to debts relating to the prior owner.
From a practical point of view, no financial institution will offer a mortgage to facilitate the purchase without a public deed.
The procedure involves the drawing-up of the deeds of transfer by a public notary. This is an independent official who oversees the process and ensures that the proceedings take place according to the law and that the documentation is verified.
The amount charged by the notary is prescribed by law and varies in function to the price of the property.
INSCRIPTION OF NEW TITLE ON THE LAND REGISTRY
Once the property has been transferred it is advisable to register the new ownership details with the public property register.
Apart from not being able to obtain a mortgage without doing so, failure to register can cause multiple problems in the future with regard to future property transfers, inheritances, defending title against third parties etc.
REMOVAL OF THE PREVIOUS MORTGAGE FROM THE REGISTRY
While not a legal requirement, it is preferable to have the previous mortgage removed from the property register and the cost is normally attributable to the seller, who sells ‘free of encumbrance or charge’.
It is best practice even though the mortgage has been paid off following the sale of the property. The charge will still appear on the register and its removal incurs a number of charges, notably notary and registry charges.
The process involves obtaining a certificate from the financial institution that issued the mortgage that the mortgage has been discharged.
This certificate is then presented to the notary who draws up a public deed to that effect. The deed is then presented to the registry for inscription on the property register which thereby removes the mortgage charge from the property.
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