Overview of the Real Estate Market in Turkey

Oguz Erkan, LL.M.

Basic law governing real estate ownership in Turkey, restrictions on foreigners and some statistics. 

 The Turkish real estate market has experienced significant growth since 2012, following structural changes made by the government to attract foreign buyers. The Turkish Statistical Institute (TurkStat) reported a remarkable 60% year-over-year increase in December 2021, with 226,503 houses sold. The top-selling locations were Istanbul, the southern resort of Antalya, and Ankara, with 26,469, 12,384, and 3,672 units sold, respectively. Among the foreign nationals who purchased the most properties, Iranians led the way with 10,056 units, followed by Iraqis with 8,661 and Russians with 5,379 units. Afghans bought 2,762 properties, while Germans acquired 2,358 units in the same year. 

The growth of the real estate sector in Turkey can be attributed to several factors, including: 

  • • A well-developed infrastructure at fair prices. 
  • • Favorable legislation, investment opportunities, and banking options. 
  • • Simplified procedures for property acquisition. 

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  • • Continuous government support for foreign investors. 
  • • A large population of over 82 million, creating a robust domestic market. 
  • • Attractive touristic destinations that also serve as investment opportunities. 

Legal Restrictions for Foreigners 

Article 35 of the Land Registry Law No. 2644, amended by Law No. 6302 in 2012, abolished the condition of reciprocity for foreigners interested in purchasing property in Turkey. As a result, citizens of 183 countries are allowed to buy real estate in Turkey without any reciprocity requirements. However, there are some general limitations that apply to foreign ownership: 

1. Foreigners can own real estate properties or other limited property rights (including mortgages) up to a maximum of ten percent (10%) of the administrative district area in which the real estate is located. Presidency has the authority to double these limits if deemed necessary. 

2. The surface area of the real estate property owned by a foreign individual in Turkey should not exceed thirty (30) hectares. Presidency may double this limit if required. 

3. Real estate properties cannot be located in military forbidden or security zones. Title registry offices ensure compliance with this requirement. 

Taxes Related to Real Estates in Turkey 

1. Property Tax: 

Property tax in Turkey is calculated based on the value of the property and varies depending on the location. In major cities, the property tax rate is 2 per thousand, while it is 1 per thousand in normal cities. For shops, the rate is 4 per thousand in major cities and 2 per thousand in normal cities. 

2. Corporate Profits Tax: 

If the owner of the property is a company, a corporate profits tax of 20% is imposed on net profits obtained from real estate transactions and rental income, including capital gains. 

3. Income Tax: 

Individual landlords earning rental income are required to pay an income tax that gradually increases from 15% to 35%, depending on the income bracket. www.erkanattorneys.com info@erkanattorneys.com 

4. VAT: 

VAT rates in Turkey vary depending on the type of products or services provided. For real estate used for housing and with an area less than 150 square meters, a VAT rate of 1% applies, while other properties are subject to an 18% VAT. 

Real Estate Ownership Fees in Turkey: A property purchase fee of 2% is imposed on both parties (seller and buyer) as part of the property acquisition costs in Turkey. 

Acquiring real estate in a foreign country is a process that requires careful consideration and comprehensive research for many people. During this process, obtaining legal advice regarding real estate acquisition in Turkey is crucial. At Erkan Attorney partnership, we would be delighted to assist you with legal consultancy related to real estate acquisition in Turkey. 

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