New Decision About Buying Real Estate in Turkey With Foreign Currencies

Created: 2022-01-31
Last Updated: 2024-05-17
Views: 4298

Content Index

Exchange foreign currency before buying real estate in Turkey... Whats the story?
What is a foreign currency exchange certificate?
- What is the purpose of this decision?
Frequently asked questions about foreign exchange certificate:
Is buying real estate in Turkey easy?

Exchange foreign currency before buying real estate in Turkey... What's the story?

The Real Estate Registration Department known as the Tapu Department in Turkey issued a new decision on the exchange of foreign currency before buying real estate . In other words, foreigners interested in buying a property in Turkey will be obligated to obtain a so-called foreign currency exchange certificate before transferring ownership of the property to their name. What is meant by a foreign currency exchange certificate? To whom does this decision apply?

What is a foreign currency exchange certificate?

Currency exchange certificate is a document that shows the sale of foreign currency to a bank operating in Turkey to be sold to the Central Bank before the ownership of the property is transferred from the seller's name to the buyer's name

Let's show you that with an example:

Previously: Muhammad is a Palestinian citizen who owns 100,000 dollars and wants to invest it in the form of real estate in Turkey. Previously, Muhammad was able to exchange his money through private banks or through money exchange services or in any other form he wanted, and then transferred the amount to the seller in Turkish lira or Dollars, where he was Able to pay the price of the apartment in foreign currencies (Dollars - Euros - British pounds) provided that he pays the equivalent of the price of the apartment in Turkish lira, and then the process of transferring ownership to his name

Now: Muhammad has found the desired property and will exchange the 100,000 dollars through one of the exchange offices or he will pay it by hand without exchange, and this is what he is no longer able to do after the recent decision that forces him to transfer the amount into Turkish lira by depositing it with one of the working banks in Turkey, which in turn will transfer the amount to the Turkish Central Bank for disbursement and transfer to his account and grant him a foreign currency exchange certificate, without which he will not be able to go to the real estate registration department and transfer ownership to his name as it was previously, as it has become a conditional document to complete the registration process.

**Exchange foreign currency before buying real estate in Turkey**

What is the purpose of this decision?

What is the point of the decision as well? Why would a currency exchange certificate be required now? Is it possible to negatively affect the purchase of the property?

There is no doubt that you have asked these questions to yourself, so let us satisfy your curiosity by answering your questions with the following:

In light of the recent decline in the Turkish lira, many merchants, particularly contractors and owners of construction companies, are holding foreign currencies from the exchange into the Turkish lira. As much foreign currency as possible in its central bank.

In light of this, this law was issued in the form of Article 13 in the Central Bank circular on capital movements, the regulation for implementing the Turkish Nationality Law, and implementation instructions related to the sale of foreign currency to the Central Bank of the Republic of Turkey.

Does this law negatively affect the real estate purchase process?

This law does not pose any consequences for foreign investors, but may be unpopular for contractors and housing project owners, as it will force them to receive the amount in Turkish lira instead of receiving it in foreign currencies as it was previously.

**exchange foreign currency before buying real estate in Turkey in central ban;**

Frequently asked questions about foreign exchange certificate:

To clarify the matter further, the Tabu Department shared a publication containing 14 questions on this subject. In turn, Ramzy Real Estate translated the questions and answers to clarify the picture and information for those wishing to purchase real estate after this decision, and it comes in this:

First: Are foreign buyers obliged to exchange currencies to complete the transfer of ownership?

Answer: According to Article 13 of the law issued on 01/24/2022, all foreign persons wishing to buy a property in Turkey are obliged to pay the price of the property to be purchased in the local currency of the Turkish Republic by transferring their money from foreign currency to Turkish lira through a bank. And by the intermediary bank to the central bank, and then the payment is made to the seller and the ownership is transferred to the name of the buyer.

That is, the decision applies to all foreigners who come to buy a property after January 24, 2022, and the purchase process will not take place without doing so.

Second: Where is foreign currency exchanged?

Answer: The currency exchange process is carried out through one of the banks operating in Turkey to be transferred to the Central Bank exclusively, and for this reason, the option to exchange at exchange offices or pay foreign currency by hand will no longer be available.

قانون صرف العملات الأجنبية عند شراء عقار في تركيا

Third: What is the amount of currency that I must exchange to obtain the certificate?

Answer: According to Article 3 of the new law, foreign currencies are exchanged for the equivalent of the entire sale price. If the property price is 900 thousand Turkish liras, the equivalent of its full value in foreign currencies must be exchanged.

Fourth: What is the foreign currency purchase document?

Answer: The currency exchange certificate is a paper document that shows the sale of foreign currency to a bank operating in Turkey to be sold to the Central Bank before the ownership of the property is transferred from the seller’s name to the buyer’s name

Fifth: What information must be mentioned in the currency exchange certificate in order for it to be accepted by the Real Estate Registration Office (Tabu Department)

Answer: All of the following must be mentioned:

Name and Surname

Passport number

Or the Turkish ID number TC for the person who will exchange foreign currencies on behalf of the person concerned

The amount of foreign currency sold and its equivalent value in Turkish lira

A statement stating that this transaction took place within the scope of Article 13 of the circular relating to capital movements.

**Foreign currency exchange certificate in Turkey**

Sixth: Is the foreign buyer obliged to exchange the amount himself?

Answer: It is not necessary for the buyer to carry out the draining process himself, as the process can be done by the seller, buyer or even a real estate broker.

Seventh: Can the buyer carry out the exchange process after purchase?

Answer: No, it is not possible to exchange foreign currency after purchase because the purchase process will not be completed until the foreign currency exchange certificate is obtained by the Central Bank and then submitted to the Real Estate Registration Department "Turkish Title Dept.".

Eighth: Is foreign currency exchange required when buying real estate in order to obtain Turkish citizenship?

Answer: Whether it is in real estate purchase transactions with the aim of obtaining Turkish citizenship or not, the decision to exchange foreign currency and obtain the certificate is required and obligatory.

Ninth: Are there other documents required for real estate purchase transactions in order to obtain Turkish citizenship (certificate of conformity) other than the foreign currency exchange document?

Answer: When buying real estate with the aim of obtaining Turkish citizenship, the following will be required:

Foreign Currency Exchange Certificate

The official bank receipt (the receipt showing the transfer of the amount disbursed by the buyer's account to the seller's account

Knowing that the currency exchange certificate must be submitted before registering the property in the Tapu Department, but the official bank receipt showing the transfer of the amount from the buyer’s account to the seller’s account can be submitted later, provided that it is not later than the date of preparing a document (certificate of conformity).

**Foreign currency exchange through the Central Bank of Turkey**

Tenth: Is it possible to exchange foreign currency after transferring it to the seller's account?

The answer is no problem with that, it can be transferred from the buyer’s account to the seller’s account and then by the seller to the central bank to be exchanged and obtain a foreign currency exchange certificate, but the crucial point here is that in this case the official bank receipt will be requested before completing the transaction

Let's show you that with an example:

Ahmed, a Libyan citizen, transferred the price of the independent property number 8, within the Deniz Istanbul complex in Beylikdüzü district of Istanbul, with a price of $265,000 through a bank transfer from his account outside Turkey to the seller’s account within Turkey.

In this case, the owner of the property "seller" must exchange the amount in a Turkish bank in order to obtain a foreign currency exchange certificate instead of Ahmed "the buyer", in addition to extracting an official bank receipt showing the transfer of the amount spent by the buyer's account to the seller's account before applying To the Real Estate Registry Department and transfer ownership from the seller's name to the buyer's name.

Conclusion: In the case of currency exchange after transferring it to the seller’s account, the bank receipt must be presented to the foreign currency exchange certificate before completing the sale, bearing in mind that the official bank receipt will not be requested before the transfer of ownership if the foreign currency exchange took place before the transfer is made. Amount to the seller's account.

Eleventh: Does this decision apply to payments made prior to its issuance?

Answer: Payment receipts made prior to the effective date of application of the decision will be legally accepted and recognized and a foreign currency exchange certificate will not be required. However, the official bank receipt must be submitted to the Land Registry Office prior to the transfer of ownership and payments made by methods such as manual payment will not be accepted. "Payment by hand"

That is, it is mandatory to submit bank receipts for payments made before the decision without a foreign currency exchange certificate, and no payments will be accepted without receipts confirming it.

**Exchange Euros and Dollars in Turkey**

Twelfth: How is the value of the receipts that were paid before applying the decision calculated?

Answer: Since the payments made before the implementation of the decision will not be possible to obtain a foreign currency exchange certificate, it will be sufficient to present the official bank receipt confirming it.

Accordingly, the value of the property mentioned in the title deed should not be less than the value of the transferred amount, and in cases where payment is made in foreign currencies, its value is calculated according to the exchange rate in the Central Bank a day before the date of extracting the bank receipt.

Let's show you this with examples:

Alaa is a Moroccan citizen who made a payment of 1.000.000 Turkish liras on 11/11/2021 of the value of the property to be purchased and on 15/12/2021 he made another payment of 500,000 thousand Turkish liras, and showed the official bank receipts for those payments, in In this case, the value of the property will be recorded in the title deed of 1.500.000 TL and it cannot be registered with a value less or more.

But if Alaa paid $100,000 on 11/11/2021 and $50,000 on 12/15/2021, the amount will be calculated and recorded in the title deed as follows:

The first payment will be calculated at the exchange rate of 9.81, which is the exchange rate of the Central Bank one day before the date of the 10/11/2021 payment, so that the total value of the first payment will be 981.000 Turkish Liras.

As for the second payment: it will be calculated at the exchange rate of 14.20, which is the bank’s exchange rate one day before the date of the payment 12/14/2021.

In this case, the value of the second payment will be 710,000 TL, bringing the total amount to 1.691.000 TL, which is the amount that will be recorded in the title deed when the process is completed.

Thirteenth: Will the Tapu fees be paid in Turkish lira based on the foreign currency exchange certificate?

Answer: According to the details of the decision, the title deed fees will be paid in Turkish lira because the price of the property will be recorded in Turkish lira exclusively and it will not be possible to manipulate it by the seller or buyer or even change the currency of the currency.

It is noteworthy that the costs of transferring ownership are estimated at 3.9% of the total property value, and it is one of the types of real estate taxes that are paid once.

Fourteenth: Will this decision be applied to payments made before January 24, 2022?

Answer: The details of the decision will not be applied to the payments made before the date of 24/1/2022 even if the procedures for registering them have not been started in the Department of State.

Is buying real estate in Turkey easy?

One of the things that every investor or foreigner who is about to buy real estate in Turkey fears is to find that buying and owning real estate in Turkey is difficult or fraught with many complications and difficult matters, and this is precisely what made many investors constantly ask their questions in order to find a clear answer.

The Turkish government did not hesitate to provide all the facilities that attract foreign capital to it in order to buy and own real estate, and the most prominent of what it provided:

1 - Tax cuts and the issuance of laws to constantly amend them, and this allowed the investor to obtain a greater profit. Taxes are one of the issues that concern the investor and in European countries it is considered very high, and this is what distracted investors from it

2 - The Turkish government abolished the reciprocity law, and all foreigners around the world can own real estate in it, except for five nationalities (Syria - Armenia - North Korea - Cuba - Greek Cyprus).

3 - Any foreigner who buys real estate in Turkey for the first time is entitled to benefit from the exemption from value-added tax.

4 - Ease of procedures and ownership of real estate in Turkey and the completion of the matter within a few days.

You should know that the new laws introduced by the Turkish government do not affect the decisions of foreigners to buy and own in Turkey, despite all that, real estate ownership in Turkey is still easier than ownership in other developed countries.

If you are interested in the real estate market in Turkey and the latest news and developments in this field, you should constantly follow our website because we are keen to keep you updated so that you are always aware of everything related to this Turkish real estate sector.

At Ramzy Real Estate, we offer our clients a range of important services that everyone is looking for, the most important of which are:

- A set of advice and tips that will help to make the right decision.

- A comprehensive study on everything related to the real estate market in Turkey.

- A detailed report about the property of your choice.

- All the information you need about real estate in Turkey.

- We answer your various questions.

- A legal team expert in all the details of owning real estate in Turkey will be with you to discover any loophole, if any.

- Trust that you will not be faced with limited options, but rather in front of a diverse list in order to choose the best for you.

Some of the important tips that you should keep in mind are:

Do not buy a property in Turkey before you have reviewed the various laws and regulations related to this matter and the latest updates and developments so that you will not be a victim of real estate fraud or the like…contact your advisor now and get your safe golden opportunity and learn through it everything that interests you about the real estate market in Turkey.

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