Buying Property in Turkey in 2022-2023 – Citizenship, Mortgages, Loans, Taxes, and Installment Plans

In 2022, a record number of real estate investment deals was made with foreigners in Turkey. In Q1, a total of 14,344 properties were purchased by foreign citizens ingrowing c Turkey. The above figure is 45% above the YoY number and makes up 4.5% of the total property sales in Turkey.

Both financial institutions and the government in Turkey offer not only various citizenship by real estate investment programs to non-residents but also access to available mortgage loans. Foreign citizens may receive mortgage loans for the purpose of financing in real estate in order to launch new businesses in Turkey, invest in the country’s economy, or obtain a residence permit or citizenship to move there together with their families. Without a mortgage loan, the above could be challenging to achieve.

What makes relocation to Turkey a sound decision?

With the economic crisis and sanctions imposed on the country, many foreigners still decide to acquire houses, apartments, and villas therein, be it for cash or on a mortgage. Houses for sale in Turkey are a good buy and the reasons behind the purchase and the desire to move to the jurisdiction are obvious, in spite of certain challenges:

• friendly relations between Turkey and the governments of China and the EU countries, which is a definite bonus
• mild Mediterranean climate, with a 9-month long beach season, and a high potential for nut, fruit, and vegetable growing enterprises that are among the priorities in the Turkish economy
• financing in real estate is available for foreigners who may acquire property in Turkey on a mortgage or  on credit with favorable terms
• In Turkey, foreign residents may open personal or corporate bank accounts that are necessary if they decide to apply for a mortgage
• Reasonable prices for apartments, villas, and commercial real estate finished with premium quality materials. A 4-bedroom apartment with a swimming pool on the Mediterranean seafront in Turkey will cost you USD 500,000 only and may be financed via a mortgage.
• Citizenship by real estate investment, with financing in real estate available in the form of mortgages. After you have obtained citizenship by investment via purchasing property in Turkey valued upwards of USD 400,000, you’ll be able to travel to EU countries on a visa-free basis. 
• With the country’s stable economy, business people enjoy superb opportunities to set up and expand their businesses, including, inter alia, the ones in Turkish Free Zones boasting beneficial tax rates and free unobstructed export and import routes.

Can a foreigner buy property in Turkey – step-by-step guide

To buy property or obtain a mortgage in Turkey in 2022, a foreigner shall go through the same stages and meet the same requirements as before. From the article below detailing the experiences of and the recommendations from our partners in Turkey you will learn what to do and how to document your property title to an apartment or a house in Turkey after you receive your TAPU, residence permit or citizenship therein. Assisting our customers with mortgage loans in Turkey is not an issue for the International Wealth high caliber industry experts.

Property in Turkey – how to purchase an apartment in person or do it remotely

Before they initiate sale and purchase procedures in Turkey, a buyer should decide how the said sale and purchase deal shall be closed. You are free to do it either in person or remotely by proxy.

Where you have no time for lengthy trips, lack both experience, legal knowledge in the field, and Turkish language skills, the right thing for you to do is to buy property in Turkey remotely. In the latter case you don’t need to visit the country in person. Feel free to delegate the related authorities to professional real estate agents, lawyers, and developers. 

This will save you both time and money. You’ll be able to pick the property you wish for in Turkey within your budget and desired location. By contacting real estate pros and passing all your worries to them, you will avoid any potential fraudulent deal risks and won’t let primary or secondary property sellers deceive you. Assisted by real estate industry pros, you may get a mortgage in Turkey on your request.

Things to keep in mind when purchasing property in Turkey

The first issue a foreign citizen has to deal with is how to match their finances and a desired Turkish province and city to live in, while deciding on equipment their future apartment, villa, hotel, or rancho in Turkey will have. Making preference lists can simplify the choice and minimize the options to choose from: 

• infrastructure
• property function 
• distance from the sea 
• number of floors and area 
• furnishings
• your budget or opportunities to get a mortgage for buying a property in Turkey. 

You should communicate all the above wishes to the International Wealth industry experts. The latter will come up with a real estate list meeting your requirements. Should you decide to make an independent choice, you should only trust tried and trusted real estate agents and developers.

The second stage implies making either a personal or a virtual property tour and negotiating with the manager. After you have received the above Turkish property list, it makes sense to start negotiating with the agency’s manager. A reliable company boasting an excellent reputation will offer you a virtual or a personal property tour in Turkey. 

Please, realize that a study tour of the city you are about to live in and the properties you may purchase is not a sufficient ground for signing a sale and purchase agreement with the agency. No payment for your future apartment is made at this stage. The buyer has the right to abandon the property purchase if they are not happy with anything. The service above may be either free or fee-based.

The third step to make in order to purchase property in Turkey is dealing with formalities and preparing the necessary documents:

• Opening a bank account with a Turkish bank for the customer (a Turkish non-resident). The payment in question from the Turkish bank will be reckoned towards payment under the Turkish residency or citizenship by investment program to buy property in Turkey. If you have an account with a Turkish bank, feel free to apply for a mortgage to purchase property in Turkey.
• Property valuation by an independent valuer is an important stage to complete so that you could be granted citizenship or permanent residency in Turkey. It is the amount stipulated by the valuer that is crucial for the Turkish Migration Management Service to determine the bottom-line property price.
• Signing a bilingual sale and purchase agreement in Turkish and the foreign purchaser’s native language.
• Translating, apostilling, and notarizing the buyer’s documents, including, inter alia, their passport, birth certificate, marriage certificate, etc.
• Registering property title to the new owner and obtaining TAPU from the General Directorate of Land Registry and Cadastre in Turkey.

Foreigners about to not just purchase an apartment in Turkey but also obtain residency or citizenship therein should communicate their wishes to the International Wealth team. We will assist you with document preparation and include the above documents in our liability list when signing the agreement.

FYI: feel free to apply for citizenship by real estate investment in Turkey remotely in 2022. For the above purpose, your property price shall be upwards of USD 400,000 per adult applicant.

Buying a property in Turkey in 2022 – taxes 

When buying a property in Turkey, future property owners need to know what taxes they will pay for their new apartment in Turkey and how often. Please be advised the said taxes are charged annually and paid as a lump sum.  

In 2022, Turkey charges several real estate taxes:

• TAPU document cost – a lump-sum totaling 4% of the property’s cadastral value
• Capital gains tax on real estate sale – 15% to 40%
• VAT on real estate purchase of 1% (for properties up to 150 square meters) to 8% (for properties above 150 square meters) for residential premises and 18% for commercial facilities 
• Annual fees:
  • 0.1% – 0.2% – for lands and real estate with no building permit in Turkey
  • 0.2% – 0.4% – for commercial real estate
  • expensive housing tax (for real estate priced upwards of TRY 5,000,000) is charged on costly properties in Turkey and makes 0.3% to 1.0% of the property price depending on its appraised value
  • 0.3% – 0.6% – for land plots with building permits.
• DASK (Dogal Afet Sigortalari Kurumu) – an obligatory state insurance for all property owners in Turkey. Its price varies depending on the region, ranging from EUR 20 to EUR 200
• Stamp duty of 0.1% to 0.6% is paid when making the real estate sale and purchase deal in question, its exact amount depending on the Turkish property’s appraised value
• With real estate lease, tax levies are not paid in Turkey, provided annual profits therefrom do not exceed TRY 6600 (for residential properties) and 49,000 TRY (for commercial real estate). Other than that, rental profits are subject to progressive taxation, with tax rates of up to 40%.

Real estate taxes in Turkey are linked to the property’s cadastral value. The more expensive your residences are, the higher fees and taxes you will pay on an annual basis. 

Ways to purchase property in Turkey – financing in real estate and available options

Foreign citizens are free to purchase residential or commercial property in Turkey and pay for it in cash or by bank transfer. In the same way as for Turkish nationals, an opportunity to pay by installments, use credit payments or mortgage loans is available to them. Each option comes with its own positive and negative aspects, and certain peculiarities need to be taken into account to successfully purchase property in Turkey, be it in a mortgage or otherwise.

Full settlement

In Turkey, all financial transactions and business deals are made through local financial institutions or foreign branches thereof. The latter option is only available to foreign citizens buying real estate directly from the developer with a representative office in their country. 

In other cases, a foreign national will have to open an account with a Turkish bank, deposit the full amount to be paid for the real estate in question thereon, and make a legal money transfer to the seller. Cash payments popular back in the day may result in fraud on the part of the seller. To prevent the outcome and court proceedings that may follow, foreign property buyers should deal with trusted real estate agents and developers exclusively.

Property in Turkey on a mortgage

To be eligible for a mortgage in Turkey, a foreigner shall have good reasons therefor and be able to document their stable income that is good to qualify for the mortgage. In 2022, Turkish banks are favorably disposed towards foreign investors. They approve mortgage loans to be granted to non-residents for up to 20 years. Below, you will find standard mortgage terms and conditions for foreigners in Turkey:

• mortgage term in a Turkish bank – up to 20 years
• mortgage amount – up to 75%
• mortgage interest – 11% to 15% for TRY mortgage loans and 6% to 8% for USD mortgage loans
• property valuation by the bank with extra accompanying expenses of 1% to 1.5% of the mortgage amount
• bank fee for mortgage loans in Turkey – 0.5% of the mortgage amount
• property insurance – EUR 150 – EUR 250 per annum.

On the negative side, the issue of citizenship or residence in Turkey remains. If you purchase property in Turkey on a mortgage, you may only apply for a Turkish passport or a residence permit in Turkey after you have paid back your mortgage to the bank in full.

Installment plans for buying a property in Turkey

The International Wealth partners in Turkey are detailing the issue of installment plans for buying a property in Turkey:

• banks in Turkey come up with 0% installment plans for projects under construction that are available till the house has been commissioned
• listed below are the terms you shall meet for your installment plan to be approved that are similar to those for a mortgage: initial installment is required, you shall document your income, and monthly payments under the loan may not exceed 30% of the total household income.

Foreigners buying real estate in Turkey on a mortgage are eligible for the local citizenship by investment scheme. Applicants therefor may obtain citizenship in Turkey after they have purchased residential property, land plots, or commercial real estate in Turkey and repaid the loan in full.

Property in Turkey – citizenship and residence permits

A foreign citizen wishing to purchase properties in Turkey in 2022-2023 may apply for citizenship or a residence permit in the jurisdiction. The ultimate outcome depends on the amount invested and the property owner’s wishes. Opportunities a foreigner will enjoy after having purchased a land plot, commercial properties, or residential real estate in Turkey are enviable:

1. you will receive your residence permit (ikamet) in Turkey after the sale and purchase transaction has been made and you have received TAPU for your property. In 2022, the scheme was amended by setting the minimum real estate price of USD 50,000. The residence permit is valid for 1 to 2 years in Turkey and foreign citizens may extend it if they wish so. Having lived in Turkey for at least 5 years, a foreign national may apply for Turkish citizenship.
2. To be eligible for a Turkish passport and citizenship, a foreigner shall purchase residential or commercial properties therein upwards of USD 400,000 per an adult investor. The holding period for qualifying investors wishing to keep their citizenship in Turkey is 3 years. You are free to lease out your real estate or use it as a home office for any approved business purposes.