Owner Identity

The first assumption is that the person you are dealing with is the owner. In some cases it is not. People have been known to pass themselves off as the owner, obtain a deposit and then disappear.

Ask for a copy of the title deed (Turkish tapu).This will state who the owner is. Then ask to compare this with the identity card (Turkish kimlik) of the person who says they are the owner. If everything is above board, the seller will have no objection to doing this.

Any reluctance to do so could well mean that there may be potential problems. Similarly if anybody (other than a recognised estate agent) is claiming to be the representative of the owner ask for their Power of Attorney (Turkish vekaletname) and check it against their identity card.

The copy title deed will show whether there are any mortgages or other legal obstacles on the property. It will show any rights of way in favour of third parties. You don't want to buy a property and find that people have the right to trek across it!!

Planning Permission

Never assume that a building has planning permission, or if it has, never assume that the building is in conformity with it.

Ask to see a copy of the planning permission (Turkish yapi ruhsat).

This document will not only confirm whether the planning permission exists but whether it covers the building you are interested in. It will also show whether the building is in a scheduled zone, i.e. a forestry zone, a restricted building zone, or a military area where ownership by foreigners can be restricted, or where further building is prohibited.

Vacant Possession

Make sure that the property you buy is unoccupied.

Any contract you sign should have a clause containing vacant possession.

Utilities

Check that basic utilities such as electricity, telephone, water and where applicable gas, are connected. Never assume that they are.

Service Charges
If you are purchasing a property in a condominium ask for full details of the service charges. Always get this in writing.

Debts and Tax on Property

Check whether there are any unpaid taxes on the property and always ensure that taxes and debts on the property are the responsibility of the seller up to the time of sale. Again this should be clearly stated in the contract.

Property Tax

A tax is levied on every property transfer in Turkey,at a rate of 3% of the value shown on the title deed. This is generally split equally (1.5% each) between the seller and the purchaser, however in the resort areas of Turkey there is a practice of shifting this entirely to the purchaser. This should be agreed in advance between the parties and stated in the contract.

Military Permission

As a foreigner you have to obtain military permission to be registered as a property owner in Turkey. It is the responsibility of the seller or the estate agent to apply for this on your behalf.

Make sure that they agree to this. The charges for this vary from region to region. Ask the seller or estate agent to put the cost in writing.

Dask

Compulsory Earthquake Insurance is mandatory for all houses except for the buildings which belong to public establishments and the buildings constructed on village settlement areas.

Contract of Sale

Drafting a contract of sale is the seller's responsibility.

Make sure that he accepts this, otherwise you will face extra legal fees from your lawyer if he does the work for you.

NEVER hand over any money or sign any document without first taking independent legal advice.

Conveyancing Procedure - Off Plan Properties

1) Pre-Contract Stage

The purchaser will agree with the seller to purchase a specific property.

The parties will agree a price.

2) Contract Stage

The parties draw up a contract in which the conditions of the property and the sale are specified.

a)The contract represents a commitment by the seller not to sell the property to a third party, while waiting for the military permission to be issued. It is a legal commitment by him to sell the property to the purchaser.

b) In return the purchaser pays a deposit (usually, but not always 10% - it can be higher) to the seller.

This is the legal commitment by the purchaser to buy the property. Such contracts can be notarised by a public notary. A contract which is not notarised is still valid. Many property sales contracts are not notarised as they would attract a 0.75% stamp duty if they were notarised. This could mean a considerable additional expense.

Legal advice should be taken before signing a contract or any other similar legal document in Turkey.

3) Official Searches

The purchaser should instruct a qualified lawyer to undertake a search of the Land Registry records.

This search will typically include an inspection of the Land Register (tapu sicil) to confirm ownership of the property.
 
The inspection will also show the existence of mortgages or any other legal obstacles to the purchase of the property.

The search will include an inspection of the Planning Register (kadastro)

This will show whether any planning permission has been granted for the property

If it has, the search will show whether the property is in conformity with the planning permission

The result of the search will generally contain a recommendation as to whether to buy or not.

Based upon this, the purchaser can then make an informed decision as to whether to proceed with the purchase of the property.

4) Military Permission

As the purchaser is a foreigner, permission must be obtained from the Turkish military authorities to allow the purchaser to be registered as the owner of the property in the Land Register.

This process of obtaining military permission can take from 3 – 6 months. An application is made on the purchaser's behalf, usually either by the estate agent or the seller.
 
The purchaser usually provides them with his passport details.

Without the military permission, a foreigner cannot be registered as the legal owner of property in Turkey.

5) Stage Payments

As you are purchasing a property in the course of construction you may be required to make stage payments. It is important that the seller/contractor provide some form of security for those stage payments, pending the handing over of the title deed, normally on completion.

If the seller/contractor is not offering adequate security then any money you pay over may be at risk in the event of the death, insolvency or any other untoward event happening to the seller/contractor.

6) Optional Mortgage/Legal Charge as security for the purchaser.

This is an optional service, dependant on the seller/contractor giving consent. Please ask your solicitor for advice.

7) Completion

Once the military permission has been granted, and the construction finished, the purchase can be completed. This is done by the seller transferring the title into the name of the purchaser by having the purchaser's name registered in the Land Register as the legal owner.

The purchaser will receive a title deed (tapu senedi) which is a copy of the entry in the Land Register. The purchaser will then pay the balance of the purchase money to the seller. The purchase is now completed.

Taxation in Turkey

From the point of view of property ownership in Turkey, the tax system can have several effects. These notes are meant as a rough guide only. For detailed information you should consult a tax expert. As the potential owner of property, you should take note of the following:

Under-Declaration of Value

For the purpose of reducing tax liability the value of most properties are under-declared. This is a widespread practice and one that is tacitly accepted by the Turkish government.

However, as Turkey moves closer to full membership of the EU, the Turkish authorities are tightening up on such practices. There is no restriction in the contract on under-declaration, but it is advisable to show the full value, in order to avoid problems with the Turkish tax authorities in the future.

Under-declaring the property value also has repercussions if you decide to sell the property before five years, as you would have to pay tax on the profit made between the selling price and the price that was declared on the title deed.

Capital Gains

Tax is payable to the Turkish government on any capital gains arising from the resale of Turkish real estate property. Such gains are taxable under Turkish income tax law, which means that the rate of tax to be applied to any capital gains tax will depend upon any other income you have made in Turkey as well.

There is one exemption from capital gains arising from the resale of property. Profits made from the resale of a residential property which is identified as the owner's principal residence in Turkey and which has not been re-sold within five years of the original purchase, will not be taxed.

Second properties, non-residential properties and properties sold within five years of the original purchase date are excluded from this exemption.

Taxation of Rental Income

If you rent your property in Turkey, any rental income will be subject to Turkish income tax. This is the case whether you are resident in Turkey or not. Such income will be taxed by Turkish income tax, which is a progressive tax and increases the tax bands as the overall tax liability increases.

Double Taxation Treaties

The UK has a double taxation agreement with Turkey which means that income earned in Turkey is taxed only in Turkey and not a second time in the UK. To date, the Republic of Ireland does not have such an agreement.

Inheritance Tax

There is an inheritance tax in Turkey applied progressively in bands ranging from 1-10%. This also benefits from the double taxation agreement and is not taxed twice.