Frequently Asked Questions

• What can I buy?

As the Turkish property market is only a freehold market all foreign nationals may purchase property or land, provided that property is in the local district and your independent lawyer has conducted a search at the registry office.

• What is the capital gains tax?

A real estate property may enable an individual to obtain two types of gains.

One, you can rent the property out and earn rental income. In this case, you are to pay a personal income.

Two, the market value of your property may rise and hereby you attain gain and you will pay tax on the capital gained in Turkey.

If the gain is a result of the sale of a residential property that was purchased more than five years, the gain will not be taxed.

However if the residential property was purchased within the previous five years the gain will be taxed, not under the gains tax but as income tax.

• What is the income tax?

Personal income tax rates vary in compare to your income from being 15-35%.

• What about real estate tax?

Annual real estate tax (a tax similar to the Council tax here in the UK) is 0.1% for residential buildings.

This tax is calculated on the basis of declared value of the property which could not be less than a threshold determined by tax authorities. Tax payments are made in two equal instalments in the period March-to-May and in November each year and those are collected by the local municipality/council.

The new owner of a property has to declare the actual price, which has been paid to the seller, to the municipality by the end-December in the year of acquisition.

• What about rental income?

Rent is considered as one of the items that you are taxed on, just like here in the UK.

Rental income must be declared annually unlike sales of property, which must be declared immediately.

What is the inheritance tax and gift tax??
Inheritance tax is paid in Turkey on the value of any assets in Turkey as of the date of your death. The tax is called inheritance tax rather than, as in the UK, an estate tax. Unlike here in the UK, where the tax is calculated on the basis of the whole estate, it is calculated by reference to each individual’s inheritance. So two people inheriting the same estate will each be paying their own tax and even if they inherit the same share, the amount of the tax payable might be different, depending on their personal circumstances.

The transfer of property within Turkey, from one to another without any payment or by inheritance is subject to inheritance and succession tax.

Taxpayer is the person who acquires property by inheritance or gratis as a gift.

Inheritance and succession tax is assessed on the declaration submitted by taxpayer.

In this case of inheritance, the declaration should be submitted in four months starting with the date of death. If the death occurs in Turkey and the taxpayer is outside of Turkey, the declaration period is extended to six months. In the case of occurrence of death and being a taxpayer outside of Turkey, the declaration period will again be four months. However, when both the death and the taxpayer are in other countries, the declaration period is extended to eight months.

In the case of transfer by gratis as a gift, the declaration should be submitted in one month following the date of acquisition of the property.

• What about stamp duty?

There is a wide range of transactions on which stamp duty is charged. The Stamp Duty rates applied to contracts in which a monetary clause exists and tenancy contracts are 0.75% (of the amount stated in the contract) and 0.15% (of the rent), respectively.

• Will I be double taxed?

Turkey operates a dual taxation agreement with the UK, but it should be noted that local property taxes still apply and can vary.

All of the assets will have to be declared for the purposes of the UK taxation and double taxation is a relief as this will not apply here.

• How is this calculated?

The overall value of the part of the estate you inherit is calculated in accordance with the guidelines laid down by the tax authorities.

Real estate is valued at fair market value and an exemption is allowed for the first part of the inheritance. For example the exemption tax for an inheriting was £21.000 and for a surviving spouse the first £42.000 of the inheritance was exempt. The exemption was only £500 as a donation.

• What about debts?

Any debts, including mortgage or overdrafts, any medical bills as well as funeral costs are all deducted from the asset value.

How does the revised law affect me as a foreign property buyer/investor?
The changes made will have no effect on the property buyers but only related to the amount of land foreigners are entitle to buy.

With the revised law, a non-Turkish citizen can now buy land and freehold property up to 10% of the land in any town, city of resort. On the other hand, the total area of land a foreigner can won in Turkey has been settled to 2.5 hectares.

• Should I take out insurance on my new property in Turkey?

It is advisable to insure your property in Turkey just as you would here in the UK or anywhere else. You can take out buildings insurance only or include the contents if preferred.

• Can I rent my property?

Rental income is liable for tax assessment in the UK or in Turkey and will be payable depending on the personal circumstances.

Most of the developers that we work with in partnership do have a rental department and we are planning to set up a rental department in our London based office.

You can rent your property either through the rental departments independently, through local agencies, our developers or through other UK based agencies.

• How are we covered for medical care in Turkey?

Turkey has an excellent standard of health care, but you must have full medical travel insurance otherwise you would have to pay for this.

• What is the local currency?

The local currency is Turkish Lira however the Euro is widely accepted in all retail outlets. All major Credit Cards are also accepted throughout Turkey.

• Can I open a bank account in Turkey?

If you are in the process of buying property in Turkey, then you can open a bank account in Turkey with any Turkish bank.

• Can I take money out of or transfer money to Turkey?

Yes, either by foreign exchange or in cash.

All money can be transferred via your local bank foreign exchange department or you can transfer your money with money transferring agencies, which offer better exchange rates.

• Can I set up a business in Turkey?

The Turkish Government have recently changed the law to allow any non-nationals to open a business without having to have a Turkish partner.

• What about selling costs?

The only cost for the resale is the commission to the seller, which is approximately 5%. The buyers pay 3% purchase tax, which is a part of the buying costs and the local documentation and legal fees on top of this.

Property may be sold to Turkish, or foreign nationals without restriction. Because of the change in law the lira is now convertible so proceeds of the sale of a property can be converted to whatever currency and subsequently transferred to any country you choose.

• What about the title deed?

The seller and the buyer usually need to attend in person to sign the title deed.

However, if this is inconvenient, you can give a Power of Attorney (POA) enabling another person to attend on your behalf. This should be in Turkish and generally signed in front of a notary public officer.

• What about Powers of Attorney?

If you are intending to authorise a Power of Attorney for use in Turkey, the procedure is different depending on whether you are a Turkish or not, whether you are issuing it in Turkey or in the UK.

If the Power of Attorney is prepared here in the UK, it must be correctly executed as a deed under English law for use in Turkey for any UK citizen or a corporate entity registered in the UK. Then there are four steps to follow: Notarisation, Legalisation, Verification and Translation.

Step 1 – Notarisation
The POA must be certified or attested by a notary public officer. This is the proof that a document has been duly executed or duly signed. In most cases this will require the grantor of the POA in to sign in their presence to allow them to identify the signatory and witness the signature.

Step 2 – Legalisation
The POA must be verified, legalised or apostilled by the Foreign & Commonwealth Office (FCO) in order to enable it to be used abroad, for example in Turkey. This is the official confirmation that a signature, seal or stamp appearing on any document belong to a recognised notary, attached with an apostille which confirms it is genuine to be acceptable in Turkey.

Step 3- Verification
After your POA has been apostilled by the FCO, it is important to check with the Turkish Consulate, to make sure that your POA will be recognised in Turkey.

Step 4 – Translation
If the translation of the POA is done in the UK, the translation must be notarised and apostilled too in the UK.

However if the translation of the POA is done in the Turkey, the translation must be done by a sworn translator registered at a Turkish notary and notarised by a Turkish notary. In this case there is no need of the apostille or any other legalisations.