PROCEDURE OF PURCHASE - REAL ESTATE KUSADASI
After acceptance of an offer on a
property, the following procedure will be followed but you will be assisted in
all:
- Obtain
several photocopies of the passport of the person(s) purchasing the property
-·Obtain 12 passport-sized photographs of each person purchasing the property (cost approx 15YTL each person)
- Obtain a Turkish tax number for each person
- Open a Turkish bank account(s), these may be in Euros or Sterling. It
will be advantageous to also have an account in Turkish Lira.
- Obtain a copy of the deeds of the property being purchased
and check that the deeds are “clean”, i.e. that the property can be sold.
- When ready to complete the purchase, go to the Notary (government regulated
lawyer) to have the formal contract drawn up and for it to be signed by both the
vendor and the purchaser. Please note that, for all foreign purchasers, a
translator is insisted upon by the Notary. The Notary fee and fee for the
translator are payable in cash on the day.
- The purchase documents will be sent to the Turkish army, which will check the
identity of the purchaser through various channels and, in particular, will
check there is no criminal record.
- Instruct an English speaking lawyer to follow up the deeds,
which can take several months. Alternatively, Damlacan Real Estate (Samyeli
Real Estate) is able to perform this service. Fees will be explained at
the time of instruction.
- Purchase tax on the property is payable to the Turkish Government at the time
of collection of the Deeds. It is possible to authorise Damlacan Real
Estate to collect the Deeds on the purchaser’s behalf.
Buying property in Turkey is not as complicated as you might imagine. The
procedure is often far simpler than in most other European countries.
Foreign nationals may purchase land and property in Turkey
under their own names provided that properties are not located close to a
military airport, station etc.
After an agreed sale, in order to acquire the title of a
property, an application has to be made to the local Land Registry Office. The
title may be transferred once checks have been made to ensure the property meets
all necessary requirements.
A solicitor is not needed in Turkey although it makes sense
to consult one for your own piece of mind. Persons wishing to buy property in
Turkey can be apprehensive about their choice of Solicitor since they will not
be familiar with the firms nor, in most cases, with the civil law system. We can
put these misgivings to rest by recommending the Solicitors we work with who are
reliable and will provide an efficient and professional service.
We can further assist by explaining the civil law procedures
and translating documents. If a client so wishes we can also act on their behalf,
through a Power of Attorney or a written authority, to actually complete a
purchase or sale of a property on their behalf.
During the transaction, the seller declares that he has received the full
purchase price from the buyer. This process can take a number of months, as the
Land Registry office needs the official permit papers from the military
administration.
The acquired property may be resold and the proceeds of the
sale may be transferred out of Turkey.
There is no time restriction for reselling property after
having bought, you can get it registered in your name and resell it the next
day.
Remember, that to reserve a property you will normally be
required to pay a 10% deposit.
At the moment, it is virtually impossible to get a Turkish
mortgage unless you are resident and working in Turkey.
The easiest way to raise finance to buy a Turkish property is
by remortgaging your property in the UK or Ireland. It is advised that funds for
the purchase should be transferred into the country through a Turkish bank and
specifically identified for that purpose. The foreign currency should be
sufficient to cover both the purchase cost plus other costs incidental to the
purchase. A recent decree aimed at aligning Turkey is currency laws with the EU
states that importation of foreign currency is free, it cannot be subject to any
legislation and its origins cannot be questioned.
- Foreign nationals can buy land or property
anywhere in Turkey except in military zones
- Title Deeds: Each freehold property will have
a property deed known as a tapu, the name of the present owner
is written on the tapu in addition to a photograph and general
information about the plot size, plan number, district town and
location
- Using a lawyer: It is possible to buy in
Turkey without using a lawyer and go directly to the Land
Registry Office, however we strongly recommend that you use a
solicitor or lawyer familiar with Turkish property laws.
- The lawyer/solicitor will carry out all
necessary checks on the property. These include, but not limited
to, checking the seller of the property is the owner, checking
there are no outstanding bills on the property, location checks,
seek living permission and arranging electricity and water
connection.
- Aegean Army Search: A military background
check is made on all foreign nationals buying in Turkey. Anyone
with a criminal record cannot buy property in Turkey. The cost
of this is included in the purchase costs detailed under the
heading. Purchase and Running costs. This process takes about
six months, and once approved the TAPU will be issued.
- Land Registry: Both buyer and seller can be
present to enter new details in the Registry book at the Land
Registry Office. However if Power of Attorney has been given to
a lawyer/solicitor, they can act on behalf of the client and
will retain the TAPU until contacting the client.
- Insurance of the property is the
responsibility of the owner once the TAPU is in their name.
- Bank account: it is a good idea to open a
Turkish bank account for payment of bills.
- UK Tax: Turkey has a double taxation
agreement with the UK and Ireland. We advise you to consult a UK
taxation specialist regarding rental income and capital gains
tax (CGT)
- Will: A will is advisable for both English &
Turkish law
Essential costs
Annual Real Estate Tax (ARET)
This tax,
which will be levied at c.0.1% of the declared
value of your property, will be due annually.
Normally, the seller of your property will have
paid the ARET for your year of purchase.
Environment Tax
This tax will
be collected through your water bills at a rate
of c.0.13 YTL/m3 for residential property.
Communal Maintenance
This figure
will be in line with the estimate included in
your specific contract. As an example, £55-80
for a 2-bedroom apartment is normal, depending
on facilities.
Insurance and DASK
Although the
rebuild value of your apartment will need to be
agreed, buildings insurance, including glass
cover and contents cover and the legally
required DASK earthquake insurance will be c.
£200 per annum, for an average 2 bedroom
apartment, depending on the levels of cover you
require.
Utilities
Although it’s
impossible to quantify the ongoing cost of your
utilities, as they are charged on a meter basis,
Edison Ford has been advised that c. £40-50 per
month is average for a couple living full time
in a property. This figure is an average, in
order to reflect the differences between summer
and winter usage.
Recommended costs
Individual Property Maintenance
If you wish to
have your property cleaned and inspected
regularly during the year, above and beyond any
standard rental package services, this will be
available from either a developer direct, or
many third party sources. Quotes in the region
of £200-250 per annum are normal, depending on
the level of service you require. If you have
any problems with your property, which are not
covered by the building and manufacturers
guarantees, then you will of course be liable to
cover these maintenance costs.
Rental Packages
This will
depend on your choice of company and there
tariff. Packages can either be on a one-off fee
basis (c.£200 per annum), or a small annual
charge (c.£50 per annum), followed by a
percentage of your return.
Sale costs
When you come
to sell your property there are two main avenues
open to you, each with their own nuances. The
first option is only available for purchasers of
off plan property.
Selling Before Completion
This option
incurs the lowest legal fees and also the lowest
level of costs in general. If you are successful
in selling your property before completion, you
do not need to take ownership of the property in
the eyes of the land registry. As such, any
buyer buying from you before you complete will
be liable for your final completion payment for
the property and also any associated taxes and
legal fees due on completion. The expenses you
are likely to occur are legal fees, which
depending on the method employed for the
transaction could vary around the level of £500.
You may not be liable for any income tax / CGT
in Turkey; however, your UK liability will
remain.
It is
important to note however, that this method does
also have several disadvantages. If you do not
complete on the property in terms of both
payment and title, you are still effectively
selling an off plan property, which commonly
will not attract the same value as it’s
completed equivalent. Secondly, it is possible
that choosing to sell your contract can narrow
your audience, as buying off plan is perceived
as a higher risk.
Selling After Completion
This option
means that you will need to complete on your
property, which will involve making your final
payment for the property and also the associated
costs and taxes involved in completion. For more
information on the costs associated with
completion, please refer to Edison Ford’s
completion document.
Although
selling after completion will incur the full
level of purchase and legal costs, it has
several advantages. Firstly, a completed
property is likely to attract a higher value
than that of a property sold off plan. Secondly,
a completed property is likely to attract a
wider audience, including people who do not have
the confidence to purchase off plan. Finally,
completing on your property gives you the option
to hold the property and prospect for further
growth.
The costs
involved in selling a property registered in
your name are as follows:
- Any costs
associated with ownership such as ARET for the
year of sale.
- Transfer tax
at the rate of 1.5% - As the normal 3% figure
will commonly be split with your buyer.
- Land
Registry fees of c. £50.
- Full legal
fees, which are likely to be £1,000 - 1,400.
- Minimal
Military Permission fees, as the seller commonly
starts a buyers application.
- Capital
Gains Tax/Income Tax in Turkey.
Whether or not
you decide to sell your property before or after
completion, you will have to pay agents fees for
the marketing of your property. Edison Ford is
pleased to announce it’s standard rate is only
3% for the sale of your Turkish property.
Tax Overview
The following
table highlights the current rates of Turkish
Income and Capital Gains Tax. The Turkish system
treats any capital gain realised as additional
income for that tax year. It is important to
note, that after 4 years of ownership of a
residential property your liability to Capital
Gains Tax in Turkey diminishes.
Although this
table will give you an insight into your
potential tax liability, there is a system in
place, which adjusts the purchase price of your
property in line with inflation, to ensure you
are not over taxed. Calculating CGT is therefore
not as straightforward as deducting the purchase
price from the sale price.
0-7,000.00 YTL
15%
18,000.00 YTL
for the first 7,000 a fixed 1,050 YTL, then 20%
40,000.00 YTL
for the first 18,000 a fixed 3,250, then 27%
40,000.00 -
over 40,000 YTL for the first 40,000 a fixed
9,190, then 35%
It is also
important to note that there is a double
taxation agreement between Turkey and the UK,
which ensures you will not be taxed on the same
gain twice. The figures and suggestions made in
this document are not guaranteed to be accurate,
as the tax system is inherently complicated.
Therefore if you would like specific information
or advice relating to your tax situation please
consult a specialist tax adviser. If you do not
have such an individual in place.
For details of
our current Turkish offerings, please use our
comprehensive property search, which can be
found on any page of the EFIP website -
selecting Turkey in the country field.
Having said
this, it always pays to salman@realestatekusadasi.co.uk as
some of our recommendations will sell out almost
instantly as they usually come with very
lucrative discounts.
The above
information and estimates are prepared to the
best of our knowledge. Edison Ford accepts no
liability for errors or omissions
Property rent a tax
Firstly, you can rent it out and earn rental
income. In that case, you are to pay a personal
income tax.
Personal income tax (based on rental income and
capital gains)
