[BUYING AND SELLING REAL ESTATE IN TURKEY]
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be exempt from VAT. However, companies that are engaged in the 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, the sale of such real estate shall be exempt from the income tax. Capital gains generated by companies shall be subject to the standard corporate tax rate of 25%. However, 75% of capital gains shall be exempt from corporate tax provided that the real estate has been owned by the selling companies for at least two years. 4. Acquisition of Real Estate by Foreign Real Persons and Foreign Commercial Companies The Land Registry Law regulates real estate acquisitions made by foreign real persons and foreign legal entities. Foreign real persons are entitled to purchase real estate in Turkey, under the Land Registry Law. By Article 35/1 of the Land Registry Law, “Foreign real persons who are citizens of countries determined by the President under international relations and the country’s benefits may acquire real estates and rights in rem in Turkey provided that the legal restrictions are to be complied with.” Foreign commercial companies, which are established under the relevant laws of their countries, are entitled to acquire real estate in Turkey only within the provisions of
special laws such as the Law on Encouragement of Tourism. However, according to Article 35/3 of the Land Registry Law, “In case the country’s benefits necessitate, the President is authorized to determine the acquisition of real estates of foreign real persons and foreign commercial companies which are established under the relevant laws of their countries in terms of country, person, geographical area, duration, number, proportion, qualification, area meter and quantity; limit, cease entirely or partially or forbid the acquisition.” There are legal restrictions for foreign real persons and foreign commercial companies in the acquisition of real estate as follows:
Areal restriction: The total area of the real estate that a foreign real person may purchase cannot exceed 10% of the total area of private real estate within the related district and 30 hectares in total within Turkey.
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• Territorial restriction: If the area desired to be purchased is within the borders of a military forbidden zone or military security zone, foreigners cannot acquire such real estate.
In case the acquired real estate is in landform, foreign real persons and foreign commercial companies
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should submit the project that will be developed on the unconstructed real estate to the relevant ministries for approval within two years. The real estate is subject to liquidation provisions in the following cases:
if the real estate is acquired in violation of the laws;
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ILN Real Estate Group – Buying and Selling Real Estate Series
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