New amendment to Law No. 5444 - Property in Turkey

Questions, answers, tips and warnings about land and property ownership by foreigners in Turkey
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New amendment to Law No. 5444 - Property in Turkey

Post by kms » Wed Jan 25, 2006 5:50 am

For anyone (from a country that has a unilateral agreement with Turkey that is) interested in buying property, there has been an amendment posted in December 2005 for titles / deed. The clauses are super informative. This forum does not allow uploads so the pages are posted on my site. I just got this back from my lawyer in Turkey. Might be worth a read..

Law No. 5444
Date of Adoption : 29.12.2005

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Location: New York and Kusadasi/Turkey

Post by sinan » Wed Jan 25, 2006 6:11 am

Here is the information

Legal guideline for owning real estate in Turkey
ACCORDING TO THE LAW IN TURKEY, in order for a natural person to acquire an immovable property in Turkey,

1. S/He should be the national of a country with which Turkey has mutuality agreement
2. S/He should abide by the legal restrictions ( such as Law on Military Restricted Zones, Law on Forests, Law on Mines)
3. S/He should use the place as a business place or a dwelling ( not for agricultural and live stock breeding purposes)
4. The property should fall within applicable zoning plan or location plan ( rural and agricultural areas are excluded )
5. The property shall not be registered at the Land Registry as a protected area in terms of military security- agriculture- energy- mining- religion and culture ( the Law projects a period of 3-6 months fort he designation of such areas).
6. The area of the property shall not exceed two and a half hectares to be registered under the name of one person. The area of the property shall not exceed 0,05 % of the total area of province ( the Council of Minister may increase it up to 30 hectares).

The foreign commercial shall be entitled to acquire immovable properties within the framework of special legal provisions.
( Such as Law on Encouragement of Tourism to provide Touristic investments and Law on Encouragement of Foreign Capital which targets flow of foreign currency to Turkey)

Foreign real persons and commercial companies are obliged to abide by the above in order to be granted limited real rights in their favour. ( In other words, restrictions to be abided by to register rights such as promissory sales agreements, right to use, right to dwell etc. on the title-deed.)

Such conditions are not required in order to register a charge / LIEN on the property. (Note: This is a new situation which is good!) *Such restrictions are not applicable in case of legal inheritance in the event of existence of mutuality between the countries.

In case of testamentary disposition, such restrictions are applicable. ( In other words, in case of donations and inheritance, restrictions will be valid. Property will not be bequeathed to a foreign national whose country has no mutuality with Turkey).

It is emphasized in the law that foreign commercial companies can own properties according to special laws and foreign national individuals can own properties according to the above conditions. Those who do not fall in those categories will not be allowed to buy properties. ( In other words, founds, associations and organisations are not allowed to acquire properties).)

Turkey Resources:
Republic of Turkey Ministry of Culture and Tourism
Turkish Embassy

New* Amendment to the law of title-deeds
** -Amendment to the law on title-deeds- **
Law No. 5444
Date of Adoption : 29.12.2005

Clause 1 – Clause 35 of the Law number 2644 on Title-deeds, dated 22/12/1934, which was abolished by the Constitutional Court, has been re-arranged as follows.

“Clause 35- Foreign real persons shall be entitled to acquire such immovable properties in Turkey which are designed for use as place of work or dwelling according to the applied zoning plan or location zoning plan, provided that it is practiced mutually and the legal restrictions are abided by. Same conditions are sought with regards to registration of limited real rights. The total area of the immovable properties and the properties which are registered with independent and continuous limited real rights in the Country which are owned by a foreign real person, shall not exceed two and a half hectares. The Council of Ministers is authorised to increase the amount of this area up to thirty hectares under the conditions set forth herein. The provisions contained herein shall not be applicable to the registration of pledges on immovable properties in Turkey in favour of foreign real persons. The commercial companies which have been formed in foreign countries according their respective law and which have legal personality shall be entitled to acquire immovable properties and limited real rights over immovable properties within the framework of the special legal provisions. The conditions and restriction referred to in the first and second paragraphs shall not be sought in relation to registration of pledges over immovable properties in Turkey in favour of foreign real persons and commercial companies which have been formed in foreign countries according their respective law and which have legal personality. Those other than foreign real persons and commercial companies which have been formed in foreign countries according their respective law and which have legal personality shall not be entitled to acquire immovable properties in Turkey nor limited real rights registered in their favour. The conditions and restrictions set forth in the first paragraph shall not be sought with regards to the properties which have been conveyed through legal inheritance to the citizens of a country with which Turkey has mutuality. The conditions and restrictions set forth in the above paragraphs shall apply in case of testamentary disposition. The conveyance transactions pertaining to the immovable properties and real rights acquired through testamentary disposition and legal inheritance by a national of a country, with which Turkey has no mutuality, shall be carried out and be discharged. The legal and practical situation are taken as the basis in indication of mutuality. In application of this principle to a person from a nation to whom right to land ownership is not granted , it is a must that the right granted by that foreign country to its own nationals in respect of immovable property acquisition are also granted to Turkish nationals. Upon the offer of the relevant institutions and organisations which involve coordinate maps and plans subject to certification, the Council of Ministers shall be authorised to designate the areas which need to be protected in terms of irrigation, energy, agriculture, mining and which have archaeological, religious and cultural features, areas within prohibited military zones and security zones, special protected zone due to their distinctive flora and fauna, and strategic areas which need to be protected in terms of public interest and security of the country, where foreign real persons and commercial companies which have been formed in foreign countries according their respective law and which have legal personality can not acquire immovable properties or can not be granted real rights, and the Council of Ministers shall be further authorised to designate the size of immovable properties which the foreign real persons and commercial companies, which have been formed in foreign countries according their respective law and which have legal personality, may acquire on the basis of a province and which size can l not exceed one five thousandth of the total area of the province. Within the body of the Ministry to which Directorate General of Title-Deeds and Cadastre are affiliated, a commission which has been formed by the representatives of the department, shall work on this matter according to this clause and within the framework of the authorities granted to them by the Council of Ministers and the offers of the public institutions and organisations shall be examined and assessed and submitted to the Council of Ministers. The maps and co-ordinate figures relating to the prohibited military zones, special military and security zones and strategic zones, which will be designated after this Law is made effective, and the decisions pertaining to the amendments, shall be immediately presented by the Ministry of Defence to the Ministry to which the Directorate General of Title-Deeds and Cadastre affiliated. Any notice pertaining to the plots which need to be appropriated due to having been within the zones specified above, or which need to be registered at the Land Registry Administration shall be communicated by the relevant authorities to the Land Registry Administration Offices. Should the immovable properties and real rights which have been acquired in breach of the provisions of this clause, or which are found to be in breach of purpose of acquisition other than statutory obligation, not be disposed of by its owner within the period given by the Ministry of Finance, such immovable properties and real rights shall be disposed, converted into money and paid to the holder of the right.

Clause 2- The following provisional clause has been added to the Law number 2644. “ Provisional Clause 2- Within six months from the date of publication of this Law by the Council of Ministers, the areas which form the subject of the sixth paragraph of Clause 35 shall be designated. Within three months of the publication of this Law by the Ministry of National Defence, the existing military restricted zones and security zones shall be informed to the Directorate General of Title-Deeds and Cadastre.

Clause 3- This Law, being valid from 26.07.2005, shall take effect on the date of publication of the same.

Clause 4 – The Council of Ministers shall exercise the provisions of this Law.

Before You Buy Gümüslük or Bodrum Properties
If you decide to buy from our partners in Bodrum, a villa from us, your stay or a 2 week stay in our Gumusluk villas will be covered by our company,
Notes on Buying Property in Turkey
Turkey may benefit from future entry into the EU but even if this does not happen the economy is growing rapidly and there are many investment opportunities. (Annabel Brodie-Smith, communications director, Association of Investment Trust Companies)

Turkey. The domestic economy is strong, earnings growth should be 25 per cent plus, valuations are good and there is scope for positive surprises in discussions of accession to the European Union (EU). Israel could also provide a wild card for positive political surprises. (Jeremy Tigue, manager of the Foreign & Colonial Investment Trust)

Real Estate investments by non-resident individuals and corporate entities -transfer of ownership title of a Real Estate in Turkey is allowed on the basis of the reciprocity between two countries.

The Turkish government views the encouragement and protection of investment as a fundamental element in the development strategy of the nation. To support this aim, the government offers a number of incentives to enhance investment. Local and foreign investors are treated equally; foreign companies can benefit from all the incentives and allowances granted to local companies. This equal treatment is guaranteed by law and by treaties for the reciprocal protection and promotion of investments. Parallel to this, new investment policy for foreign investments in Turkish real estate has been changed by legislation in June 2003. The new legislation has set the following changes:

Foreign companies can now directly purchase properties in Turkey.

Foreign companies and non-resident individuals can now freely buy real estate located anywhere except within military restricted zones in Turkey.

Each foreign investor can normally buy up to 300.000 sq meters of land in Turkey. Further land requests are subject to approval of Council of Ministers.

Non-resident investor may also invest in Turkish property through a local stock company or limited company (Ltd.)

Why Bodrum, Turkey?
Although the prices of the properties are increasing with the demand, it is still extremely cheap. In Bodrum area you can have different types of villas in addition to Apartments. Most of the houses you are going to buy will have exceptional views because of the hilly landscape of the Bodrum Peninsula. More than 90% of the goods and services you are going to buy in this area is much more cheaper than your country. (Food, water, labor,,etc.)

Bodrum is situated only 35 minutes by ferry from Kos, Greece, so you are in effect having access to two countries for the price of one. Over 2,000 British families have already settled in Bodrum over the last 3 years, they benefit by having a local British Consulate dealing with their enquiries. Bodrum is located only 40 minutes from the airport, with direct flights arriving daily from most major international airports.

Bodrum Peninsula has two fully equipped private Hospitals in which your private health insurances are accepted. Also in every part of the peninsula, there are clinics also can serve you with your insurances. English is commonly spoken in Turkey, especially in Bodrum with its very large and growing English community.

Bodrum peninsula has a very good transportation system. Dolmus (minibus) network covers all the bays on the peninsula and longest time from one end to another is around 35 minutes. Long summer season compared to other popular destinations like Croatia, Bulgaria in the emerging Overseas Homes Market. (starts at the end of March, ends at the end October)

Climate in summer season is more attractive to those who do not like excess humidity when compared to the other towns in the south of Turkey like Fethiye, Antalya, Alanya. Chance of enjoying one of the best cousins in the world, including the eagean cousine with variety of healthy herbs, olive oil,vegetables, fruits...etc.

Experience living in an environment that offers great hospitality blending cultures of West and East. Active night life bars with live music and cultural events concerts, festivals, cinemas, regattas

Foreign direct investments are subject to Foreign Investment Law No.6224. To facilitate foreign investments Government has simplified and/or abandoned several bureaucratic formalities related to foreign capital entries during the time of Turkey's proposed Customs Union with Europe.

The most significant provisions foreign investors are subject to are:

-Approval obligation
-Foreign participation is permitted up to 100%
-Forms of business entities can be limited liability or corporation
-Employment of expatriate staff is permitted
-Equal treatment is the basis for foreign and domestic investors.

Upon obtaining approval, the establishing company can register at the Turkish Ministry of Industry and Trade. Documents to be presented at the Ministry of Industry and Trade are as follows:

* Articles of Association certified by a Notary
* Certificate of conversion and deposit of the foreign currency
* Investment approval of UT
* Memorandum of Understanding, where the applicant is a legal entity

After confirmation of the establishment of the company by the Ministry of Industry and Trade, further procedures are as follows:

Registration with the city authority. This requires the presentation of:

* Rent contract for office premises
* Articles of Association as approved by the Ministry of Industry and Trade
* Certified sample of signature
* Registration in the trade register
* Registration with the Chamber of Commerce or Chamber of Industry
* Unblocking of the paid-up capital upon submission of documentation for registration in the trade register
* Confirming completion of the establishment of the company with UT
* Registration with the local tax and social insurance authority

The Turkish government encourages foreign companies to invest in Turkey either through the formation of a new enterprise or the acquisition of an existing company, both are equally acceptable.

There are no restrictions on foreign investment, in fact Turkey has entered into a number of bilateral investments with countries from all over the globe. This trend can be expected to continue as the economy expands and as Turkey's relationship with the European Union develops.

Finance may be obtained from local banks (joint ventures only), foreign banks, financial institutions or the parent company. However, interest rates are comparably high in Turkey.


Purchasing Tax

Purchasing of a Turkish Property is subject to 1,5% purchase tax (stamp duty) on registration of freehold, to be paid by the seller (1,5%) and the buyer(1,5%).

New properties can be exempt from purchase tax under certain conditions.

VAT is applicable on company to company or company to individual sales. VAT rate varies according to the usage area of residential properties: residential properties with usage areas under 150 sq meter is subject to 1% tax whereas residential properties over 150 sq meters are subject to 18% VAT.

Capital Gain Tax

Capital gains obtained from the sale of property are subject to income taxation. In the calculation of the net capital gain, the cost of purchasing can be re-calculated by escalating with revaluation rates announced by the Ministry of Finance. Capital gain is calculated by subtracting the (revalued purchase + tax exemption amount set by ministry of finance for the fiscal year) from the sales value.

Property Taxes

Property tax, paid annually in two installments is calculated over a fixed percent of the declared value of the property. Property value declared may not be less than the minimum assessed value determined for the area by the related valuation commission.

Annual tax rates for different types of real estate are as follows:

Land 0,3%
Buildings 0,2%
Redentials 0,1%

Rental Income Tax

Rental income is taxable. Individuals with real estate income may deduct certain expenses like community charges, heating, electricity, insurance premiums, repairs and maintenance and depreciation.

If income earned in Turkey consists of only rental income that has been subject to withholding tax, non-resident individuals are not required to file an annual tax return.

Rental income earned by companies is subject to 30% corporate tax. The transfer of profits abroad does not attract any penalty

Sinan Akdeniz

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Right o!

Post by kms » Wed Jan 25, 2006 6:38 am got it man!


Rental contracts and income tax

Post by Kalkan » Tue Aug 01, 2006 11:12 pm

As is known, teams of tax inspectors are visiting private villas in tourist areas and asking whoever answers the door to prove they are owners, not rentors. If an owner is caught renting a house with no rental contract and no previous income filing, supposedly he will be cited and receive a heavy fine. The onus is on him to prove he was really occupying the house at the time and that the guests were not rentors.

What is the legal procedure to register a weekly rental contract? IOW, how does one rent legally? Apparently just filing a tax return and declaring the net income is not sufficient. Guilty until proven innocent.

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