The Central Bank of the Republic of Turkey (“CBRT”) has introduced the obligation to exchange foreign currency for real estate acquisitions of which foreign real persons are the buyers, by its amendment of the Capital Movements Circular.
The CBRT also published the Implementation Instruction on the Sale of Foreign Currencies to the CBRT for Article 13 of the Circular to influence the amended Circular’s implications in practice
The payment obligations in relation to real estate acquisitions of non-Turkish citizens will be made using foreign currencies. However, before a transaction takes place, the foreign currency should be sold to a bank by providing information on the property purchase, and the payment to the seller should be made in Turkish liras.
You can get support from our Antalya lawyers, experienced in Real Estate Law, for your real estate acquisition as a non-Turkish citizen in Antalya. Our Real Estate lawyers in Antalya, who are experts in their field, ensure that you proceed without error during the purchase of real estate.
As mentioned above, before a transaction takes place, the foreign currency should be sold to a bank and this to be sold to CBRT. In return for the currency exchange, the relevant bank will provide a “currency purchase document.” It is mandatory to provide the currency purchase document to the relevant land registry before the real estate acquisition as a non-Turkish citizen.
Additionally, the Circular sets out that the currency exchange can be done by the seller and, in such case, the currency purchase document will be provided to the seller to be submitted to the land registry.
The currency purchase document must at least include the buyer’s name and surname, passport number or foreign ID number, the purchased currency’s US dollar equivalent and a statement that sets out that this exchange is made for the purpose of Article 13 of the Circular.
As there is no uniformity in this document as of now, each bank will provide this document in different ways. The important thing is to act with an expert lawyer in the field of real estate law and check whether the given documents have the necessary content.
- The currencies to be used for this transaction are US dollars, euros and pounds sterling. For other currencies listed by the CBRT, the transaction is made by exchanging these currencies to US dollars, euros or pounds sterling through the cross-exchange rates provided on the previous trading day at 3:30 pm.
- As mentioned in the Circular, the foreign currency is purchased by the banks on behalf of the CBRT. Therefore, the currencies purchased by the banks for this purpose will be notified and transferred to the CBRT on the same day. The CBRT will pay back the equivalent value of these currencies to the banks in Turkish liras.
Finally, following the completion of the foreign currency purchase procedure by the CBRT, the transactions cannot be cancelled.
In this line, the general directorate of land registry and cadastre issued a circular dated 21/01/2022 and numbered e-36189470-125.01.01-3852405.
Pursuant to the said circular, in the acquisition of real estate by foreign real persons, before the acquisition, the sale price must be sold to a bank to be sold to the Central Bank in US dollars or equivalent foreign currency by the buyer, seller, their proxies or representatives, and the foreign currency purchase document to be issued by the bank must be submitted to the land registry office before the sale. Whether or not they are subject to citizenship acquisition, foreign real persons are required to submit a foreign currency purchase document before the real estate acquisition.
Currency must be exchanged by a bank operating in Turkey and by the relevant bank to the Central Bank. For this reason, it is not possible to use foreign exchange offices or hand-changed foreign currency in real estate purchases. In addition, foreign currency should be exchanged as much as the entire sales price.
Accordingly, no foreign exchange calculation will be made regarding the value of the sales promise contract prepared in the official sales deed to be drawn up at the land registry office or the notary public, and the foreign currency purchase document will be taken as the basis for the valuation.
On the other hand, in accordance with the foreign exchange legislation, real estate sales contracts to which foreign real persons are parties as buyers can be drawn up in foreign currency or indexed to foreign currency.
In this context, the real estate sales promise contract should be considered as a real estate sales contract in terms of foreign currency or foreign currency indexed contracts; In real estate sales or promise-to-sale contracts where foreign real persons are the sellers (the buyer is a Turkish citizen or a Turkish company), the price must be determined in Turkish Lira.
Further, the Turkish Lira value in the foreign currency purchase document shall be taken as the basis for foreign real persons’ sales promise transactions in US Dollars or other foreign currency.
Although the new rules explained above may seem simple and understandable, the slightest mistake will cause a loss of both money and time. Therefore, as a foreigner, it is very important to act with a lawyer who is an expert in the field of Real Estate Law during the investment.