According to Decision No. 32 on the Protection of the Value of the Turkish Currency and its accompanying Communiqué (No. 2008-32/34), as well as Article 16 of the related Capital Movements Circular prepared by the Central Bank, foreigners purchasing real estate in Turkey are required to convert foreign currency into Turkish Lira. This requirement ensures the stability and value of the Turkish currency during real estate transactions involving foreign buyers.
Key Points of the Regulation
Foreign Currency Conversion Requirement:
Foreign individuals purchasing real estate or entering into a real estate sales agreement in Turkey must make payments in foreign currency. This currency must be sold to a bank operating in Turkey, and the bank must then sell it to the Central Bank of Turkey before the title deed transactions are completed. Payments are made to the relevant parties in Turkish Lira.
Implementation Date:
The regulation came into effect on January 24, 2022. From this date forward, foreign individuals are required to present a Foreign Exchange Purchase Certificate for real estate transactions.
Frequently Asked Questions (FAQ)
- Where should the foreign currency be exchanged?
The foreign currency must be exchanged at a bank operating in Turkey, which will then sell it to the Central Bank. Foreign exchange offices or cash exchanges cannot be used for real estate transactions.
- How much foreign currency should be exchanged?
The entire sale price of the property must be converted to Turkish Lira.
- What currencies can I use for transactions?
The currencies that can be sold to the Central Bank are U.S. Dollars (USD), Euros (EUR), and British Pounds (GBP). For transactions made in other currencies, the bank will convert these amounts into USD, EUR, or GBP before selling them to the Central Bank.
- What is a Foreign Exchange Purchase Certificate?
It is a document issued by a bank operating in Turkey that confirms the foreign currency has been sold to the Central Bank.
- What information must be included on the Foreign Exchange Purchase Certificate for acceptance by the title deed office?
The certificate must include the name and surname of the person converting the currency, passport number or foreign ID number, the USD equivalent of the exchanged currency (with the TL equivalent always indicated), and a statement that the transaction was conducted under Article 13 of the Capital Movements Circular.
- Does the foreign buyer have to personally exchange the currency at the bank?
No, the foreign buyer, the seller, their proxies, or representatives can carry out the currency exchange.
- Can the currency be exchanged after the sales transaction at the title deed office?
No, the foreign currency must be exchanged before the sales transaction at the title deed office. The Foreign Exchange Purchase Certificate must be presented before the sale.
- Is there a foreign currency exchange requirement for citizenship applications?
Yes, whether for acquiring citizenship through real estate purchase or non-citizenship related transactions, foreigners must exchange currency at a bank operating in Turkey, which then sells it to the Central Bank.
- Are there any additional documents required for citizenship (Eligibility Certificate) procedures besides the Foreign Exchange Purchase Certificate?
Yes, for citizenship applications, the title deed offices will also require a certified bank receipt showing that the exchanged amount was transferred to the seller’s account. This receipt, along with the Foreign Exchange Purchase Certificate, must be presented before the eligibility certificate is issued.
- Can the foreign currency be exchanged after being transferred to the seller’s account?
Yes, the buyer can transfer the foreign currency to the seller’s account, and the seller can then sell the currency to a bank for conversion to Turkish Lira before completing the transaction.
- Are payments made before the implementation date of the regulation valid?
Payments made before January 24, 2022, are valid. These transactions do not require a Foreign Exchange Purchase Certificate but must be documented with a certified bank receipt. Payments made in cash or by other methods are not accepted.
- How are payments made before the regulation’s implementation date assessed, and how is the declared value at the title deed office calculated?
For payments made before the implementation date, if the sale amount was deposited into the buyer’s account, it must be documented with a certified bank receipt. The sale price on the official deed must not be lower than the amount deposited. If payment was made in foreign currency, the TL equivalent should be calculated based on the Central Bank’s effective selling rate on the date of the receipt.
- Is the TL value on the Foreign Exchange Purchase Certificate used as the basis for the title deed transaction fee?
Yes, the TL amount indicated on the Foreign Exchange Purchase Certificate is declared as the sale price at the title deed office.
- How are real estate purchases financed by loans handled?
Foreign individuals can only use foreign currency loans for purchasing real estate in Turkey. The loan amount must be sold to the Central Bank by the lending bank before the title deed transaction, and the bank must provide a Foreign Exchange Purchase Certificate. The loan amount is then transferred to the seller’s account in Turkish Lira.
- Are expenses included in the TL amount declared on the Foreign Exchange Purchase Certificate?
The TL amount on the certificate must solely reflect the sale price of the property. No additional costs (commissions, fees, etc.) should be included. The declared value on the official deed must match the sale price converted to TL.
