In this 5-minute video Ilker explains the process of buying property in Turkey.
A TAPU is a title deed for property ownership in Turkey. It is an extract from the registry of Turkish real estate, and the deeds come in blue or red. They contain the owner’s photograph, location, deed type, property, and archiving data.
Red deeds are common-hold and are sub-divided into Kat Irtifaki or initial deeds, issued to the holder for owning land with an incomplete building. The Kat Mülkiyeti, the second and final deed, is issued after the building on the land is complete. A blue TAPU, legally means the holder owns farmland or building land, with or without a house.
The property acquisition process varies, depending on the policies of the builder, but the elements are similar in most contracts. Passport details, recent 4x6cm photographs and local tax numbers are crucial documents that must be submitted to the seller, by the buyer.
A landowner should apply to the municipality within three months following the title exchange this will be included in our property tax ID number application service.
How The TAPU Process Works
The process begins with the submission of a non-refundable reservation fee deposit, an initial stage payment, a second disbursement that is time governed, and a final conclusive payment, on receipt of TAPU.
Procuring the services of a lawyer is strongly advisable, albeit not crucial, for those who wish to save extra costs. You can contact us for further details on the legalities of investing in Turkish property and out experts can guide you on what works best for your circumstances.
Turkish lawyers are always available to assist individuals from other nationalities find genuine property deals, and they usually charge in accordance with the overall property worth. Before appointing a lawyer in Turkey, it is advisable to ask for quotes, as well carry out thorough background checks, prior to hiring. Again we can offer advice on choosing a good lawyer.
It can take up to six months for Turkish government offices to issue a TAPU. This is because applications go through a vigorous process, from the local TAPU office, to the Military offices, where they check if the property is not within Military zones or restricted regions.
If the property in question has already been cleared for the previous owner then the process of obtaining a TAPU should be faster and in some cases they can be processed in as little as one day following a change in the law.
The TAPU plays an important role in property ownership in Turkey. A foreigner who buys an apartment within a complex or a house in a project set to be built, is issued with a common-hold document that is based on zoning and plans.
All projects are generally inspected by the municipality for compliance with the building license. Approval means the developer will be issued with a general legal document called the Iskan.
Property owners must also acquire their own Iskan, to enable connection to public utilities, and they are also liable to pay certain bills, namely: council tax, household bills and insurance. Owning a land deed is imperative, but it is equally important to inspect records at the region’s Land Registry, to ensure that the TAPU exists.
If you intend to invest in property in Turkey, it is vital that you are aware of the various property taxes you will need to pay connected to the property you own.
For buy-to-let investors in Turkey, this is particularly important because you will need to deduct the amount you pay in taxes from the rental return you are likely to receive on a property.
Tax Rules For Non-Residents In Turkey
Let’s say you are a foreign investor looking to buy a property in Turkey. You find your ideal property in Istanbul, complete the purchase process and have a tenant in place.
The next thing you will need to find out is how much tax you need to pay on your Turkish-sourced income. Shareholders will be taxed separately on all sources of income received from a Turkish property investment.
How Income Tax On Property Is Calculated In Turkey
Your net income from your property will be aggregated and taxed at progressive rates. It is important that you keep up-to-date with your liabilities because unlike the UK, for example, tax bands in Turkey change annually.
A non-resident will be taxed at rates of between 15% – 35% but the good news is that any expenses that are connected related to the running of the property will be tax deductible such as boiler repairs and any management fees, which is why it is actually more cost effective to hire a property management company like us to take care of the paperwork.
The non-resident taxpayer can deduct 25% of the gross income as expenses without the need to provide proof of the money spent. Exemptions may also apply to income which falls below a certain threshold. The tax free allowance is currently trl3,200 per shareholder.
Contact us for more details on the latest property tax rules
Net rental income can be deducted in the following ways:
1. Actual Tax Deduction
You can deduct real expenses e.g. heating; water expenses; management costs; insurance; interest expenses and depreciation amongst other expenditures from your gross rental income.
2. Lump Sum Tax
With this option you can choose to deduct 25% of your gross income. If you choose this method of deduction you will not be able to change to option one until after two years.
Capital Gains Tax In Turkey
Capital gains from the sale of immovable property in Turkey is exempt from income tax after five years of holding the property.
If you own a property in Turkey for less than five years you will be required to pay income tax on the money you receive. Again there are exemptions on income that falls below the tax free allowance of trl3,200.
Contact us for more details on the latest property tax rules.
VAT On Property In Turkey
You will be pleased to know that property owners will not be required to pay VAT on the sale of real estate unless they happen to be estate agents or another corporate entity.
Real Estate Tax In Turkey
Real estate tax in Turkey is similar to the taxes you may pay in any country to the local government.
The tax is calculated on the value of property (land or buildings). The tax rate varies depending on the classification of the property.
Residential properties and land are taxed at 0.1% of their value. The tax rate is 0.1%. The tax rate is 0.3% for building sites or vacant land.