Points to Consider in Foreigners’ Acquisiton of Turkish Citizenship by Real Estate Purchase

Procedures and principles regarding the acquisition of Turkish Citizenship by real estate purchase are stipulated in the Regulation on the Implementation of Turkish Citizenship Law dated 31.05.2019. In line with this regulation, Directorate General of Land and Cadastre has also published a guide explaining the acquisition of Turkish Citizenship by real estate purchase. Accordingly, the points to consider for foreigners wishing to acquire Turkish citizenship are stated below. Clause (b) of Paragraph 2 of the Article 20 of the Regulation specifies the value of the property to be purchased as below:

• Property purchased between 12.01.2017 and 18.09.2018: USD 1,000,000 (One million US Dollars)
• Property purchased/to be purchased after 19.09.2018: USD 250,000 (Two hundred fifty thousand US Dollars)
• Property for which a preliminary sales agreement is/will be issued after 07.12.2018: USD 250,000 (Two hundred fifty thousand US Dollars)

Foreigners whose properties are valued below the above-mentioned amounts cannot acquire Turkish citizenship. Article 20 does not cover property bought before 12.01.2017 and property subject to a preliminary sales agreement issued before 07.12.2018. Therefore, it is not possible to acquire Turkish citizenship with  sale/preliminary sale transactions before these dates. In addition to Article 20 of the Regulation, there are other legal restrictions for the acquisition of citizenship by real estate purchase. Accordingly, foreigners may acquire immovable property of up to 30 hectares and this may not exceed 10% of the surface area of the district allocated to private property. They may purchase or issue a sale promise for an immovable property within  “Special Security Zones” upon permission of the Governor’s office. However, foreigners may not buy property or issue a sale promise for a property within prohibited military zones, military security zones and areas where foreigners’ acquisition of property is prohibited. There are no restrictions due to the nature of the property subject to sale except for agricultural lands, which require a preliminary authorization as per agriculture legislation. However, if a share in  a joint-owned property is being purchased, the deed must be annotated with a statement asserting that the other co-owners’ preemptive rights arising from law is known to the purchaser and this statement must be explained to the parties. Notarized sale promises may only be issued in relation to properties with established commonhold or construction servitude, and it is not possible to issue a sale promise for more than one independent section. Other points to consider are the number of properties and their appraisal. The law does not provide any restrictions on the number of immovable properties that can be purchased. Accordingly,  foreigners who want to acquire Turkish citizenship may fulfill the purchase value requirement of 250,000.00-USD (or USD 1,000,000) by buying more than one property. The appraisal process is based on three different values, each of which must amount to USD 250.000 (or USD 1,000,000) separately. These values are; total amount or amounts stated in the official bill or the sale promise, total amounts stated in the appraisal report, and total amount of payments. Since the determination of value in sales transactions is based on the value stated on the official bill, it is important to calculate USD equivalent of the value, as it is not possible to make a subsequent change in the sum stated on the official bill.

EXCHANGE RATES

During the appraisal process, the price of the property situated within the borders of the Turkish Republic, which will be paid in Turkish Lira must be converted into USD. Accordingly, the effective exchange rate provided on the official website of the Central Bank of the Republic of Turkey (TCMB) on the day of the sale must be taken into account. However, exchange rates of TCMB changes every day at 3:30 pm, which causes some conflicts regarding the calculations. The guide published by the Directorate General of Land and Cadastre indicates the exchange rates to consider as follows:

• In case the receipt has been paid in Turkish Lira, TCMB’s effective selling rate on the last work day prior to payment,
• In relation to the Turkish Lira value specified in the sales or preliminary sales agreement; (1) selling exchange rate of TCBM on the last work day prior to the date of the application for sale transaction or prior to the notarization of preliminary sales agreement; (2) the exchange rate based on the payment receipt (or receipts paid on the same day) that provides the USD equivalent of the sum required in the Regulation prior to the issuance of sales / preliminary sales agreement; (3) in case more than one receipt with different dates has been submitted, effective selling exchange rate of TCMB on the last work day prior to each date of payment,
• In relation to the property appraisal report, effective selling exchange rate of TCMB on the last work day prior to the date of the report.

PROPERTY APPRAISAL REPORT

According to the Regulation, a property appraisal report must be prepared for the appraisal of the property to be purchased for the acquisition of citizenship. These reports shall be obtained from appraisal entities and are valid for 3 months (three months) beginning from the date of issue. It is not possible to request a new appraisal report for the applications made within this 3-month period, however, a new report must be issued for the applications made after 3 months.

E-RECEIPT

If the payment for sale or sale promise is deposited in a bank, an approved bank receipt must confirm the transaction, and if the payment is to be made from abroad, the receipt of the sender account must be submitted as an annex. The date of the receipt of sale transactions may be a subsequent date. However, the date of the sale promise must be before the notarization of the preliminary sales agreement, or, at the latest, it must be the date the agreement is prepared. This is because the payment made after the date of issuance by the notary public will not be considered as down payment. The receipt must be submitted at the latest before the issuance of the certificate of conformity.

SALE BY INSTALMENTS

In sales transactions, for the instalment payments made after 12.01.2017, the total amount will be determined first by calculating the currency equivalents. In sale promise transactions, the sale promise payments made after 07.12.2018 will not be taken into account. After this date, at least USD 250,000 must be paid in advance before the issuance of the preliminary sales agreement in notary public and until the signing of the last agreement. Payments made after the signing date will not be accepted as down payment. If the sale and sale promise transactions are made at the same time, the sale promise payments have to be made in advance, and the appraisals and the total of payments made reach the values stated in the Regulation.

TRANSACTIONS BETWEEN FOREIGNERS

Properties subject to sale or sale promise transactions should not be registered to the title of a foreign real person. The property should also not be registered to the title of the legal entity of the company that the foreign real person owns or manages. Finally, the property should not have been subject to a transfer made by the foreign real person, their spouse or their children after 12.01.2017.  However, a property owned by a foreigner may be purchased by another foreigner for the acquisition of Turkish citizenship following its transfer to a Turkish citizen or Turkish company after 12.01.2017. The property bought for acquisition of citizenship should not be subject to sale for three years. Therefore, the foreigner who wants to acquire citizenship by buying property has to give commitment to not sell the property within this period. The foreigner in question shall be considered to be in alien status in the scope of the said transactions until the fulfillment of the commitment, and it shall not be possible to buy property from these foreigners until the fulfillment of the commitment. However, people who renounce Turkish citizenship with permission and dual citizens shall not be considered as foreigners for the said transactions.

MORTGAGE AND SEIZURE

When determining the value of a mortgaged real estate, the amount remaining after deducting the mortgage value from the sales price should be at least the amount specified in the Regulation. If there is a legal mortgage on the real estate, the amount paid in cash besides the mortgage value should also be at least equal to the amount required by the Regulation. The property may be sold with any existing mortgage. However, the public officer who will execute the sale must inform the foreigner of the said mortgage. It is possible to give commitment through promise of sale for the mortgaged or seized property. In this case, the public officer must again provide information about the mortgage for the foreigners.

AUTHORITY

In the event that the sales transactions are carried out by proxy, in addition to authority to purchase, the power of attorney must include authority to give commitment to not sell the property for three years or authority regarding citizenship application process within the scope of applicable legislation. On the other hand, notarized preliminary sales agreements must include a clause stating that the agreement is made with the purpose of acquisition of citizenship. If other conditions are fulfilled, the request of the creditor is sufficient without the consent of the foreign debtor for the commitment. If the agreement does not state that the purpose of the real estate purchase is acquisition of citizenship, commitment shall be made at the time of both parties’ registration request.

COMMITMENT

After the determination of the value sought (USD 250,000 or USD 1,000,000) on the dates indicated in the Regulation according to the principles of appraisal, a commitment shall be taken for the real estate. Commitments should not be made before reaching the value sought on the specified dates, and should not be sent to the competent authority for the issuance of Certificate of Conformity. If the values declared during the sale transaction reaches the value sought in the Regulation, the official bill must contain the following statement: “Under Article 20 of the Regulation on the Implementation of Turkish Citizenship Law, I undertake to not sell these immovables I have purchased for the purpose of acquiring Turkish citizenship for a period of 3 years.”

CANCELLATION OF THE COMMITMENT

In the event of failure to obtain the Certificate of Conformity on the grounds of non-fulfillment of requirements, the commitment will be cancelled upon request of the competent authority. In case the owner or the creditor of the sale promise requests cancellation after the issuance of the Certificate of Conformity but before the expiration of the three-year period, this request shall be examined by the District Directorate of Civil Registration and Citizenship. If the citizenship acquisition procedures have commenced, the cancellation request shall be denied. After the expiration of the three-year period, the commitment may be cancelled upon request of the owner or the creditor of the sale promise.

RESTRICTING TRANSACTIONS ON REAL ESTATE SUBJECT TO COMMITMENT

Any annotations or limited real right may be established on registered real estates. However, Directorate General shall be notified of the results of transactions that change the ownership of the real estate without the owner’s request during the commitment period.