Selling a property can be a complex process, especially when it involves a country without an escrow system. Whether you’re an expat looking to sell your investment property or a homeowner planning to relocate, understanding the intricacies of the Turkish real estate market is crucial. This article aims to provide you with tricks on how to sell your property in Turkey.

Most of our clients have already fulfilled the three-year period after purchasing their properties for the Turkish citizenship program. So now, the most asked question is how can I sell my property in Turkey and how much capital gains tax will I pay?

1- Getting the title deed records cleared

First of all, if you are an investor who benefited from the Citizenship program, there is the 3 years not-to-sell-annotation on your title deed. Before the official sales date, you have to get this annotation canceled. To do so, you must get an appointment at the land registry, via Webtapu. Otherwise, you won’t be able to sell the property.

2- Having a realistic price expectation

We usually work as a team of attorneys, accountants and real estate agents during the sales of the property. Because one of the most common reasons for a property to stay on the market for too long is, overpricing. Therefore we highly suggest our clients hire market expert real estate agents.

Agents possess market knowledge, connections and experience to market your property effectively. They identify potential buyers and handle negotiations on your behalf. Choose an agent who is familiar with the local market and has a track record of successful property sales. To attract potential buyers and negotiate a fair price, determining your property’s market value is essential. Certainly, expert agents evaluate recent sales data to get an accurate estimate. Moreover, they list your property on popular portals, social media platforms, and local classified ads to reach a wider audience.

3- Determining the right time to sell

You must choose the right time to sell. Factors such as market demand, and seasonal trends can significantly impact property prices and buyer interest.

Since March 2022, it’s not possible to apply to the citizenship program by purchasing a property that has already been used for the citizenship application before.

Moreover, some neighborhoods are not eligible for acquiring residence permits anymore. As a result, it is highly possible that your buyer will be a Turkish citizen but not an expat. This leads you to buyers who have the opportunity to use mortgage and bank loans during the purchase.

4- Checking the paperwork to secure the money transfer

Now, you might think “What does buyer’s mortgage have to do with me?”. Here is the tricky part; Turkey does not have an escrow system. In other words, no system secures the money in a neutral account until the title deed transfer. Therefore, you have to make sure everything is set for the money transfer, before transferring the ownership.

Normally if there is no bank loan or mortgage involved, the process is as follows:

  • The seller and buyer meet at the land registry on the pre-arranged appointment date.
  • The officer asks the seller if the sales price has been received.
  • Upon the seller’s approval of receiving the money, they read the official sales agreement and sign it there.
  • Within a couple of minutes, the buyer gets the new title deed which shows the ownership of the property.

On the other hand, when there is a sale with the mortgage, the money transfer is operated by the creditor bank. Consequently, nobody is asking if the seller has received the money before he/she officially transfers the ownership to the buyer.

At this point, while the buyer leaves the land registry with the official title deed of the property, the seller is left with no property and no money for the moment. If the loan agreement and official sales agreement are all in order, the bank checks the title deed transfer and sends the credit amount to the seller’s account. However automated and easy this may sound, such a process might take longer than anticipated. You might have to contact the bank’s representatives a couple of times. Follow up with the proper paperwork or keep calling the banker to get the money to your account. In some cases, this can take up to several days.

5- Capital Gains Tax

Another important point is the capital gains tax. As a rule, if you sell a property within 5 years after the purchase, you have to pay the capital gains tax in Turkey. At this point, many of our clients ask us if the depreciation in the Turkish Lira affects the taxable income.

For instance, you purchased a property for 260,000-USD, back in 2020 when 1 USD equaled 7 TRY and paid 1,820,000 TRY as the purchase price.

Year Price (USD) Exchange Rate TRY Equivalent of Price
2020 260,000 1 USD = 7 TRY 1,820,000

If it was a good investment now you must have gained profit not only in TRY but also in USD.

So, let’s say today your property is worth 305,000 USD and 1 USD equals 20-TRY. As a result, today your sales price is 6,100,000-TRY.

Year Price (USD) Exchange Rate TRY Equivalent of Price
2020 260,000 1 USD = 7 TRY 1,820,000
2023 305,000 1 USD = 20 TRY 6,100,000

At this point, many of our clients are worried about paying over-calculated tax amounts due to exchange rate fluctuations. Don’t worry, that’s not how it’s calculated. Most importantly, inflation is taken into consideration while calculating the tax. Furthermore, there are exceptions, different tax rates and deductions, all taken care of when you hire an experienced accountant or a team of professionals.

CONCLUSION

Selling your property in Turkey requires careful planning, market knowledge, and professional assistance. By following the tips outlined in this guide, you can navigate the selling process successfully, safeguard your interest and ensure a smooth and satisfactory transaction. Remember, each property sale is unique, so it’s crucial to adapt these tips to your specific circumstances and seek expert advice when necessary.

For more information or detailed calculation of capital gains tax according to your situation, please contact us.

Finally, feel free to check out our YouTube channel for more.

english speaking lawyer_ece özlü beylen_turk fortune_contracts lawyer_attorney

ECE ÖZLÜ BEYLEN

Founding Partner

For more information and your queries, you can always contact Ece.

eceozlu@turkfortune.com

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