In recent years, many countries have been using different mechanisms to attract financial resources and sustain their economic activity. One of these mechanism is what is sometimes referred to as "economic citizenship". This type of citizenship, which has its alternatives in many different countries has also been put into practice in Turkey. While citizenship by investment is used to attract foreign investment into the country, it provides foreigners with the chance to acquire Turkish citizenship by simply investing in real estate. The main purpose behind such practice, is to increase employment and encourage growth by attracting investment and foreign capital into the country.
Obtaining Turkish Citizenship by Investment
"Citizenship for foreigners by investment" or, in other words "economic citizenship" is one way of obtaining Turkish citizenship, pursuant to Article 12/a of the Turkish Citizenship Code. The code states;
"Foreigners, their spouses and children under the age of 18, who have brought industrial installations to Turkey or who have performed or thought to be performed extraordinary services in scientific, technological, economic, social, sports, cultural and artistic areas and for whom a justified offer has been made by relevant ministries, can acquire Turkish citizenship by the decision of the president, if they do not have a situation that would constitute an obstacle in terms of national security and public order."
The scope of the new regulations were published in the Official Gazette dated September 18, 2018. The regulation states that foreigners who fit into any of the below categories, may can acquire Turkish citizenship.
- People who make a capital investment of at least 500.000 USD (Ministry of Industry and Technology is authorized to determine this)
- People who purchase real estate worth at least 250.000 USD in Turkey (a three year no-sell annotation must be noted on the deed by the Land Registry Office) (Ministry of Environment and Urbanisation is authorised to determine). It is acceptable to use foreign currency or Turkish Lira instead of USD during the real property purchase. The determination of this monetary condition CBRT effective selling rate and/or cross exchange rate on the date of determination are taken to be the basis.)
- People who employ at least 50 people in a business. (Ministry of Family, Labor and Social Services is authorized to determine)
- People who deposit at least 500.000 USD in a bank located in the Republic of Turkey. (The deposit must be kept for 3 years) ( Banking Regulation and Supervision Agency is authorized to determine)
- People who purchase public debt instruments worth at least 500.000 USD. (The instruments should be kept for 3 years.) (The Ministry of Treasury and Finance is authorized to determine)
- People who purchase real estate investment fund participation shares or venture capital investment fund participation shares worth at least 500.000 USD. (These shares should be kept for 3 years)- (Capital Market Board is authorized to determine)
*** In addition to the methods mentioned above, it should be noted the applying foreigner should not pose a danger to national security and public order as a prerequisite condition as well.
Acquiring Turkish citizenship via the purchase of real estates has been the most preferred method recently, such that in the last 3 years, 7312 people gained Turkish citizenship though this way.
The steps during the process of acquiring Turkish citizenship through the purchase of real estate can be found detailed below:
1) Obtaining a Tax Identification Number
Tax identification number can be obtained from any tax office in Turkey. Original passport and photo required.
2) Opening a Bank Account in Turkey
- Real estate purchasing transactions will need to be documented.
- Original passport and tax identification numbers are required.
- An official document( such as utility bills) as proof of current address is required.
3) Finding the Real Estate
- A total of 250.000 USD or equivalent in foreign currency or Turkish lira(more than one property can be purchased)
- Residence permit granted
- Construction servitude or title deed
- Conformity with the Official Valuation Measurement
4) Real Estate Purchase or Making a Preliminary Contract for Sale
Initially, the applicant needs to purchase a real estate from Turkey valued at a minimum price of 250.000 USD or needs to make a preliminary contract for sale at a notary regarding the sale of the real estate. Thus, foreigners may also acquire properties at ongoing construction projects if desired, provided that they have the following conditions: This real estate must be a condominium or have a construction servitude. Then, a 3 year not for sale record should be noted to the office of land registry. The annotation on the declaration box/section should state: "There's a commitment that the said property will not be sold within 3 years from the date of acquisition within the scope of Article 20 of the Regulation on the Implementation of the Turkish Citizenship Law."
- It is sufficient to fulfill this price condition in foreign currency or Turkish lira.
The effective selling rate of the CBRT and/or the cross-exchange rate on the date of determination is taken to be basis for determining this monetary condition.
- The property does not have to be a real estate – flat/apartment or house. It may also be an empty plot of land, a workplace, a field or a garden. Yet, if the chosen property is a field, the purchaser will need to obtain the necessary preliminary permits and a business plan on how this property will be used should be submitted accompanying the application. The Project will have tobe complete in 2 years.
- The value of a single immovable property may be at or over 250.000 USD, or the value of more than one property may also total 250.000 USD, there's no limitation in this regard.
- Properties purchased before 12.01.2017 can not be used fort his purpose.
- The value of properties purchased between 12.01.2017-18.09.2018 must be at least 1,000,000 USD, and for properties purchased on 19.09.2018 and after must be at least 250,000 USD.
- The real estate must not be registered on behalf of a foreign real person( the spouse and children of the foreign real persons are included.) Additionally, after 12.01.2017 there is a condition that the property should be transferred to the foreign real person who will acquire the property personally.
- The property can not be registered in the name of the legal entity or the company of which the foreign real person is a partner or manager.
- In sales transactions made on or after 15.10.2018, submission of bank receipt proving payment is also necessary. From this date forward, the transfer/payment receipt of the sales or preliminary sales contract value must also be made through a banking institution.
- Within this scope, it is also necessary to certify that the sums for payment of real property have been deposited by the buyer (or the relevant people who will be named on the application, with a bank receipt (remittance, EFT etc.). For fund transfers made from abroad, the receipt of the account to which the fee will be sent must also be submitted. The receipt date must also be after the sale date in sales transactions. However, in the preliminary sale, the date of the receipt must be before the contractualisation at the notary or at the latest on the day of contractualisation. Payment receipt made after the date of issuance of preliminary sales contract at the notary will not be valid as it will not be considered as "cash" payment.
- It is possible to acquire a property with an existing mortgage or lien on the property. If the property is acquired through a sale-mortgage transaction; determination of value is made after deducting the loan amount from the sales price, the remaining portion should be at least as much as the amount sought in the regulation.
- It has become possible to purchase the property in installments, provided that the property is purchased after 19.09.2018 and that each installment is paid after this date. Payments in installments made before 19.09.2018 will not be valid. The value of installments in US Dollars is calculated based on the effective selling rate of the Central Bank of the Republic of Turkey, on the date of the transaction.
How Can Foreigners Own Real Estate in Turkey?
- In order for foreigners to own real estate in Turkey, a pre-application must first be made.
The real or legal person should apply to the General Directorate of Land Registry and Cadastre together with the owner of the property. Additionally, they can request an appointment without having to personally visit the directorate offices by calling the "Alo 181" Call center, which provides service 24 hours a day, or through "randevu.tkgm.gov.tr".
On the other hand, Turkish companies with foreign capital should first apply to the Provincial Planning and Coordination Directorate (İPKM) where the real estate is located, and then apply to the Land Registry Directorate after a positive response is received. Such companies can apply personally, by post or email.
After the pre-application, the date for the transfer of the real estate should be determined.
- What are these application documents mentioned above?
- Title deed of the real estate
- Passport and photocopy of the foreigners who will buy the real estate(with certified
- Turkish translation)
- "Real Estate Market Value Certificate" received from the municipality where the
- property is located.
- Compulsory earthquake insurance policy for residences and workplaces
- 1 photograph of the seller (white background, biometric)
- 2 photographs of the foreigner buyer (white background, biometric)
- Certified translator where the foreigners who buy do not speak Turkish
- The original or certified copy of the Power of Attorney where the transactions are made by an attorney (certified Turkish translation if POA is acquired abroad)
- What are the legal restrictions regarding the acquisitions of real estate by foreigners in Turkey?
- A foreign real person can purchase up to 30 hectares of land and acquire limited real rights
- Foreign real persons can acquire real estate and limited real rights totaling up to 10% of the district area subject to private ownership.
- Real estates that are acquired in violation of legal procedures and that are determined by the relevant ministry and administrations to be used contrary to the purpose of acquisition, and for which the relevant ministry is not applied for in the purchases on the condition of a project, or whose projects are not realized within the specified period, are subject to provisions of liquidation.
- What are the fees and expenses for foreign buyers in the process?
- Title deed fee (Determined according to the value of the house.)
- Service fee to be paid to the directorate of land registry
Key factors to consider when buying real estate in Turkey:
- Residence permit is not required to purchase real estate.
- Foreigners who buy real estate in Turkey can apply for renewable short-term residence permits in accordance with the "Foreigners and International Protection Law No. 6458"
- A pre-application should be made to the land registry office for the transfer process
- The transfer of property is possible with the formal deed and registration signed at the directorate of land registry
- Attention should be paid to restrictions such as mortgages on the real estate. Inquiries about these can be made online at "parselsorgu.tkgm.gov.tr."
5) Obtaining a Certificate of Conformity
- Official Valuation Study should be requested
- A bank transfer receipt should be filed
- An application should to be made to the Ministry of Environment and Urban Planning
6) Obtaining a Short-Term Residence Permit (This process takes 2 to 4 weeks)
After the sale is complete, a short-term residence permit can be obtained using the address of the property purchased.
The documents required for obtaining a residence permit after owning a real estate are as follows:
- Residence Permit Application Form (must be signed by the foreigner and/or by their legal representative)
- Original copy and photocopy of passport valid for at least 60 days or longer than the requested residence permit
- 4 biometric photographs (taken within the last 6 months, on white background)
- Bank statements that evidence sufficient financial means during stay
- Valid health insurance (The insurance must cover the desired period of stay stated on the residence permit application)
- Receipt of fee payment and card fee paid
- Official e-signed/signed and sealed/stamped document showing that the title deed belongs to the person.
- For residence permit applications, the foreigner must enter the country. This entry can be with a Visa or with a visa exemption. Applications should be made to the General Directorate of Immigration Authorities. It will be possible to apply for Turkish citizenship as soon as the residence permit is obtained.
7) Obtaining The Real Estate Valuation Report
A "Real Estate Valuation Report" which shows the market value of the real estate should be obtained from an appraiser with a valid license approved by the Capital Markets Board. This can be obtained through one of the the CMB Valuation Companies, in order to determine the amount of 250.000 USD mentioned in the applications for the acquisition of the real estate through sale. The CMB expert makes the valuation based on the effective selling rate and/or cross exchange rate of the Central Bank of the Republic of Turkey (CBRT) on the date of the transaction.
8) Collecting The Documents For Turkish Citizenship Application
- Application form
- 2 photographs (White background, biometric)
- Passport (and notary certified translation)
- Documents showing the applicant's identity information (such as birth certificate)
- Health report
- If the applicant has 1st or 2nd degree relatives of Turkish citizenship, a copy of the birth certificates of such relatives
- Document proving the applicant's marital status
- If the applicants is married, marriage certificate, a copy of birth certificate of spouse and and children
- If the applicant is divorced, document proving such situation, if the applicant is a widow, spouse's death certificate
- Receipt showing that the service fee has been paid
9) Applying for Turkish Citizenship
In order to acquire Turkish citizenship through a property purchase, an application should be made to the state with all the aforementioned necessary documents.
The fees for citizenship applications are as follows:
- Service fees to be collected by the state
- Reporting costs of CMB Appraisal Companies
- Translation costs
- Notary expenses
- Cost of documents received from relevant government departments
- Cost of health report
10) Interview and Fingerprint
During the approval phase of the application, the applicant is called by the nearest provincial security directorate for fingerprinting and interview.
It is extremely important that the application is made by an expert and that the process is followed through accurately. Any mistakes made during the application process or missing documents may cause the application to be rejected or the process to be prolonged.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.