The purchase of property in Turkey is straightforward provided there is a reciprocal agreement between the buyer’s home country and Turkey. Simply put, if a Turkish national is granted permission to buy a house in your country then you may also have the same privileges in Turkey (in accordance with a law enacted in 2007). Foreign commercial companies who have established themselves as legal personalities within Turkey can buy property subject to the same reciprocity providing they adhere to certain laws designed to ensure a businesses’ economic contribution.
Despite the relative ease of buying property in Turkey, a few restrictions do still exist. Land in Turkey, for example, is subject to zoning schemes that govern how that land should be used. If the chosen land has not been designated as appropriate for property development, then certain issues may arise, meaning it is essential to consult a lawyer for details on the local legal system. Furthermore, the property law in Turkey also states that, under the provisions of the Village Act, overseas buyers cannot own land which falls outside of the designated centre of the nearest village (although this is highly unlikely to affect foreign buyers). The only other restriction of note prohibits overseas buyers from purchasing land that is located in the vicinity of a military zone.
Once an offer is accepted by the vendor, it is common practice in Turkey for the buyer to sign a preliminary contract and pay a deposit of as much as 10% of the property’s sale price. This is largely to protect the interests of both parties as the contract is conditional upon the satisfactory completion of title deed searches. The deposit becomes non-refundable however, should the buyer withdraw the offer for reasons other than those agreed in the conditional contract. Similarly, if the vendor breaks the contract in this way they will have to compensate the buyer. Once everything has been approved, the final contract is signed in the presence of a public notary (for which a fee will be charged) and the title deeds are transferred to the buyer which takes a couple of months. Additional costs will be incurred for the connection of utilities and you will also be legally required to take out earthquake insurance which is charged at a uniform rate. All buildings in Turkey must adhere to the guidelines laid out in the Construction and Earthquake-proof Regulations and official plans. It is important to ensure the building meets these stipulations which you can do by obtaining the Habitation Certificate from the seller. If you have built a property this will be issued to you and you cannot legally occupy the property or subscribe to utilities providers without it.
Further costs to take into account are the buyer tax of 1.5% as well as Annual Real Estate Tax which is 0.1% as well as community taxes. In Turkey an Environmental Services Tax (EST) is also charged at 0.13 New Turkish Lira (YTL) per one m3 of water used. This will be charged through the water services. The tax on your net rental income in Turkey is taxed in the same way as any other income meaning that, minus your expenses and possible mortgage interest, you will pay around an average of 20% on the declared income. Capital Gains Tax is also charged in Turkey although if you keep your property for more than four years there will be no capital gains tax payable. Should you decide to sell within the first four years you will pay approximately 20% of the declared capital gains on the property which is payable locally. In Turkey, capital gains are calculated and taxed in much the same way as income.
Turkey is a secular state, where religious and political activities are conducted separately. The political identity of the country is a representative democratic republic and is headed by the prime minister of the elected party. Whilst Turkey is a largely safe place to live, the ongoing tensions with Kurdish separatists along the Iraq border make this the only part of Turkey to which it’s unsafe to travel. This remains removed, however, from the progressive climate of Turkish politics that has seen the country flourish in recent years. Various reforms undertaken in order to align the country more closely with its European neighbours have also impacted favourably upon the country’s economy which is has become one of the fastest growing economies in the world.
Since an economic crisis in 2001, caused by spiralling inflation rates, a number of economic reforms have not only stabilised the economy but have led to the currency going from strength to strength. A substantial increase in foreign direct investment and the introduction of the New Turkish Lira in 2005 has allowed the currency to even outperform the US dollar and the Euro.
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