Real estate in Turkey: trends, review of the market and current options, innovations and taxes “Golden Passport” Montenegro: conditions of the investment program for obtaining citizenship

Real estate in Turkey - will it get more expensive and what are the trends in 2023?

”Turkey is a beautiful country with a developed economy, excellent living conditions, highly liquid real estate and virtually unlimited opportunities. In 2022 alone, Turkey issued residence permits to over 153,000 Russians. It is not surprising that such a massive influx of new residents has generated an increased demand for housing. Where there is demand, there is supply and price growth. Over the past year, the price of apartments in Turkey has increased at least twice and many experts predict its further growth. Specialists of the licensing agency GARANT IN analyzed the situation on the local real estate market and are ready to share their conclusions.

What did 2022 bring?

”Before making predictions for the current year 2023, it is necessary to pay attention to the events of 2022. Over the past year, the inflation rate exceeded the mark of 80%, and real estate objects rose in price by a record 200%. Such facts became an impetus for many citizens to buy real estate in order to save personal funds. Despite the increased demand, the number of transactions among the local population in 2022 is 0.4% lower than in 2021.

The situation was corrected by foreign investors, whose market share increased from 3.8% to 4.5%. However, after the influx of foreign residents, the government revised the conditions for granting citizenship, raising the investment entry threshold from $250,000 to $400,000. Dozens of neighborhoods with more than 20% foreign residents are no longer available for the purpose of issuing a residence permit.  

Innovations and what can we expect?

Given the increased demand for Turkish real estate among foreigners, it is likely to expect an increase in the investment entry from $ 400,000 to $ 750,000. It is allowed to increase the investment threshold for registration of residence permit. While the authorities have not changed the threshold of the value of real estate to obtain a Turkish passport, but made adjustments to the conditions for obtaining. From 01.01.2023 earned the requirement: “1 object = 1 certificate”. 

All transactions must be recorded in a single contract and buy housing can only be from Turkish citizens. We should not forget about a number of political and economic events affecting the real estate market. It is expected that after the presidential elections in May, the share of the allowable number of foreigners for one neighborhood will decrease from 20% to 10%.

Turkish real estate - what is in store for the market this year?

Given the increased demand for Turkish real estate among foreigners, it is likely to expect an increase in the investment entry from $ 400,000 to $ 750,000. It is allowed to increase the investment threshold for registration of residence permit. While the authorities have not changed the threshold of the value of real estate to obtain a Turkish passport, but made adjustments to the conditions for obtaining. From 01.01.2023 earned the requirement: “1 object = 1 certificate”. 

All transactions must be recorded in a single contract and buy housing can only be from Turkish citizens. We should not forget about a number of political and economic events affecting the real estate market. It is expected that after the presidential elections in May, the share of the allowable number of foreigners for one neighborhood will decrease from 20% to 10%.

Turkish real estate - what is in store for the market this year?

The stable migration process, the rapid development and improvement of infrastructure in Turkey, the increased global inflation rate in the world - the combination of the above factors indicate that the price of real estate will steadily increase.

”Turkey - first of all, a resort country. At the moment it is possible to observe an active phase of development. In some cities improve entire neighborhoods, built new infrastructure, luxury-segment neighborhoods, open schools, kindergartens, private clinics.

The development of the tourism industry leads to the emergence of new villas, hotels, comfortable residential neighborhoods. Modern apartments are characterized by increased functionality and comfort. Buying an apartment in such a complex is a profitable investment, because the high liquidity of Turkish apartments is known to every investor.  

It should be noted that one of the most valuable tourist resources is land. Given that the share of land plots suitable for construction is steadily decreasing, we can safely assume a rapid rise in real estate prices. Analysts predict that by the end of 2023, the bulk of the objects will rise in price by at least 50% (it all depends on the class of the object, location and other factors).

”The dynamics of real estate price rise is supported by the following factors:

• high demand for comfortable housing (for personal use and investment);
• increase in the cost of construction;
• active development of urban infrastructure.

Investing in Turkish real estate is not only an opportunity to get a new citizenship and move to a developed state. It is a great chance to preserve and increase personal capital by investing it in a promising real estate object. 

If you are planning to buy real estate in Turkey, but do not know where to start, how to choose an object, how to solve related issues on registration of purchase and sale, the experts of the international company GARANT. IN are ready to help. We work only with proven developers and agencies - we will help you to find real estate, suitable for the goals and budget of the client. We will organize a trip to the location or send a detailed video of the object, we will help with the registration of the transaction, filing documents for citizenship and other important tasks. With us you do not need to spend precious time, effort and resources.

Buying real estate in Turkey - “deposit” on favorable terms

Investment in real estate is a profitable deposit. However, when choosing an object of financial investment, it is necessary to take into account not only its value, but also further maintenance costs. Tax rates on real estate in different countries differ significantly and are variable, which is due to a number of economic factors.

Turkish market attracts foreign investors democratic price of “square meters” and relatively small taxes. Another “tricky move” is the indication in official documents of the cost below market value. However, not all developers welcome such methods of understating the real price.

The popularity of the city where the investment object is located affects the amount of taxes. For example, in Ankara, Istanbul, Antalya, Izmir, property owners will have to pay twice as much. Legal actions related to the sale of real estate, transfer of ownership or lease are also taxed.

Tax when buying real estate

When formalizing a real estate purchase and sale transaction, the parties need to pay tax, which is 4% of the value. This cost is usually borne by the buyer. The amount of tax can be taken into account in advance when forming the price of the object. The basis for calculations is the cadastral value of the property - the price of the plot plus the developer's costs. Thus, with a single rate, the amount of tax will differ even within the same city.

Property tax from the owner

The tax legislation of Turkey provides for a property tax. Its amount varies between 0.2% and 0.6% of the value, depending on the type to which the property belongs (Table 1).

Table 1

Tax paid annually through special site or municipal authority. The owner has the right to divide the amount into 2 equal parts and pay them in May and November. Failure to fulfill the tax liability is penalized 6-8%. In addition to property tax, the owner also pays garbage collection services and a cultural levy.

Tax on the sale of real estate

Turkey tax law provides for cases where the owner is not required to pay the tax from the sale:

• sale of the object that is in the owner's property not less than 5 years;
• the value of the property does not exceed 18 thousand liras ($3 thousand) and for the year was sold only one object.

If the number of sales transactions for the year is 2 or more, such activity is automatically considered entrepreneurial. The owner's income is taxed at 15% of the amount that remains after deducting from the total profit of the established minimum (18 thousand liras).

Inheritance and real estate transfer tax 

The object of donation and inheritance is often real estate. The legislation of Turkey clearly regulates these legal relations of citizens of the country and residents. Tax rates are 10-30% for donation, and 1-10% for inheritance. Such a wide range provides for an increase in the fee when the value of the object is greater.

Tax on real estate rental income

A progressive scale from 15% to 40% applies to landlords who are individuals. For legal entities (agencies), a flat tax (15%) is adopted. The minimum amount that is taxed for individuals must be more than:

• 6.6 thousand liras ($1.1 thousand) for permanent rental of residential real estate,
• 49 thousand liras ($8 thousand) for permanent rental of commercial real estate. 

The maximum tax rate applies when receiving income from rental real estate over 600 thousand liras ($100 thousand).

Turkish taxation system is democratic and loyal to the owners of real estate. Favorable conditions attract foreign investors from all over the world. Fulfillment of tax obligations on time and in full guarantees a quiet life for owners of “square meters” in Turkey.

To make the right choice and not to overpay, it is worth asking for help from experts. Employees of the international company GARANT.in will help you make the right decision, as well as provide legal assistance in the execution of documents.