[BUYING AND SELLING REAL ESTATE IN TURKEY]
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KEY FACTS OF REAL ESTATE ACQUISITIONS UNDER TURKISH LAW 1. Agreement Types
seller and buyer. It is revised annually by the Ministry of Finance. b. Notary and annotation fees In case a real estate sale commitment agreement is signed before a notary public, a notary fee of 0,113% of the purchase price shall be applied. Unless otherwise agreed by the parties, the buyer and seller shall be jointly liable for the payment of the notary fee. The annotation fee is 0,683% of the purchase price and shall be paid in case of annotation of a real estate sale commitment agreement to the land registry records. The rates are revised annually by the Ministry of Finance. c. Value added tax If commercial income is generated from the sale of real estate, the sale transactions shall be subject to VAT. VAT rates for residential real estate vary from 1% to 18% depending on the net area. On the other hand, the sale of commercial real estate shall be subject to VAT of 18%. In the case that real estate has been owned by companies for at least a two- year period, the sale of such real estate shall be exempt from VAT. However, companies that are engaged in real estate trading business cannot benefit from VAT exemption. d. Income tax and corporate tax Capital gains generated by individuals from the sale of real estate shall be subject to income tax, which varies from 15% to 40%. However, if the term of holding the title is longer than five years,
Pursuant to Turkish laws, a real estate sale and purchase agreement shall be in an official form and the transfer of ownership of real estate is only possible with an official deed and registry, which is signed at the Land Registry Directorates. It is also possible to sign a real estate sale commitment agreement that sets forth the conditions of the sale before a notary public. It is advisable to annotate this agreement to the relevant land registry records to assert personal rights arising from this agreement to third parties. In case the real estate has been acquired by third parties, a lawsuit for the nullification of title deed can be filed. However, if the sale is not effectuated within five years of the annotation, the annotation will be automatically removed by the Land Registry Directorates pursuant to the Land Registry Law. 2. Buyer’s Inspection Due diligence at the Land Registry Directorates shall be carried out to determine if there are any encumbrances and limitations on the real estate, such as mortgages, attachments, rights in rem, lease annotation or any obstacle preventing the purpose of the sale. It is advisable for the buyer to inspect that the property tax for the real estate has been paid and the real estate has been constructed in compliance with the zoning plan. 3. Financial Obligations The transfer and acquisition of real estate may give rise to title deed fees, annotation fees, stamp tax, notary fees, value added tax, income tax and corporate tax. a. Title deed fee The title deed fee is 4% of the purchase price and shall be paid equally by the
ILN Real Estate Group – Buying and Selling Real Estate Series
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