Foreign Currency Exchange Obligation for Real Estate Purchases by Foreigners in Turkey
The Turkish government has enacted new legislation to further strengthen the assurances available to foreign Real Estate buyers in Turkey.
In line with the instruction published by the General Directorate of Land Registry and Cadastre on January 24, 2022, some new regulations were announced regarding the sale of real estate to foreigners in Turkey.
The Central Bank has been obliged to obtain Foreign Exchange Purchase Certificate in the sale of real estate to foreign buyers.
What is a Foreign Exchange Purchase Certificate?
The Foreign Currency Purchase Certificate is a document showing that the foreign currency was sold to the Central Bank of the Turkish Republic via a bank operating in Turkey before the sale is made at the land registry office by the foreign buyer.
This obligation applies to all real estate sales, whether the property is subject to the citizenship application by investment or not. The application entered into force as of January 24, 2022. As of this date, the real estate purchase process by foreign buyers will be as follow:
- Foreign real estate buyers and investors should fulfill their payment obligations for the real estate they have purchased in Turkey in foreign currency. (So payments will not be made directly in Turkish Lira.)
- This foreign currency should be changed from the Central Bank of the Turkish Republic through a bank operating in Turkey, by stating the reason before the title deed transactions. Accordingly, foreigners will first have to sell their foreign currency to the Central Bank through the bank and then submit the Foreign Exchange Purchase Certificate issued by the bank to the land registry directorate in real estate purchase transactions.
- Then, the payment regarding the sale price of the immovable property will be made to the relevant parties (the seller, the real person or the construction company) in Turkish Lira.
- It is also possible to transfer the foreign currency to the seller's account directly and then the seller exchange it to Turkish Lira through the central bank. The critical point here is that the Foreign Exchange Purchase Certificate must be made before the transaction and the seller bring it to the land registry office with her/his self.
Important Information Regarding New Payment Rules for Real Estate Purchases by Foreigners in Turkey:
- It is not necessary to sell foreign currency by a foreign buyer. It can be done by the seller, the proxies, or representatives of the relevant real estate.
- The price in exchange for foreign currency exchanged in the foreign currency purchase document will be reflected as the base value in the official year.
- Although the Foreign Exchange Purchase Certificate is sufficient for sales transactions other than the Turkish citizenship application, it will also be necessary to submit the bank receipt regarding the transfer from the buyer to the seller in relation to the acquisition of citizenship through the acquisition of real estate.
- In cases where the sales price is deposited into the account of the buyer before the implementation date of this circular, 24 January 2022, it will not be possible to exchange foreign currency in return for the price, and if this situation is documented with an approved bank receipt, there is no need to request a Foreign Exchange Purchase Certificate.