Foreign Currency Exchange Obligation for Real Estate Purchases by Foreigners
The Turkish government has introduced new legislation in order to further strengthen the safeguards in place for international buyers of Real Estate in Türkiye.
Article 13 of the new circular published in January by the Türkiye Central Bank, requires international buyers to now exchange the foreign currency of sales price of the real estate with the Central bank.
The Central Bank then issues an Exchange Purchase Certificate to the land registry office.
This practice came into effect as of January 24, 2022 and it is obligatory to present a foreign currency Purchase Certificate in real estate acquisitions by foreign real persons.
Essentially, foreigners with no citizenship ties with Türkiye must first bring the foreign currency to a bank within Türkiye. This bank then must exchange those monies with the Türkiye Central Bank for the required amount of Turkish Lira. At this point the Central Bank then issues a Purchase Certificate to be used when transfer the title deed (tapu) from the seller to the buyer.
The exact implementation
- The buyer can obtain the purchase certificate themselves via depositing the foreign currency into their Turkish bank account, and making the request at their branch;
- Alternatively the buyer can transfer the funds to the seller, who can then perform the transaction to obtain the certificate;
- The buyer can also transfer the funds to their authorised (via power of attorney) representative, who can then perform the transaction.
- US Dollar, Euro, and Pound Sterling are the only currencies which will be accepted.
The foreign currency purchase certificate
The bank will issue a document called the Purchase Certificate which states that the transaction was carried out in accordance with Article 13 of the circular on capital movements by the Türkiye Central Bank . It will confirm the following information:
- Full name of the investor;
- Passport or ID number;
- US Dollar equivalent of the foreign currency sold (even if that currency was Euro or Pound Sterling).
The procedure for exchange of Title Deeds (Tapu) has now changed for international buyers
- Bring the currency to Türkiye
- Exchange the currency with the Central Bank
- Obtain the purchase certificate
- Apply to the Land registry for an exchange of Title Deed.
- Declare the Lira amount indicated on the Purchase Certificate as the purchase price.
If the purchase is to be used for a Citizenship by Investment, then this amount will be used as the investment value.
Frequently Asked Questions (Source: Türkiye Central Bank)
Is there an obligation to exchange foreign currency in sales transactions where foreigners are buyers?
Article 13 of the Circular on Capital Movements issued by the Türkiye Central Bank, requires all international buyers to exchange US Dollar, Euro, or Pound Sterling with the Central Bank, before passing on the sales price in Lira to the buyer.
Where should the currency be exchanged?
Foreign currency must be exchanged via a bank operating in Türkiye and to the Central Bank by that bank. For this reason, it is no longer possible to use foreign exchange offices or foreign currency as liquid cash in real estate purchase transactions.
How much currency should I exchange?
In accordance with article 13 of the Central Bank’s Circular on Capital Movements, foreign currency should be exchanged in the amount of the entire sales price.
What is a foreign exchange purchase certificate?
The Foreign Currency Purchase Document is a document showing that the foreign currency was sold by a bank operating in Türkiye to the central bank in exchange for Turkish Lira before the sale is made by the international buyer at the land registry office.
In order for the Foreign Exchange Purchase Certificate to be accepted by the land registry office, which information must be present as a minimum.
The Foreign Exchange Purchase Certificate must include the full name, passport/ID number of the buyer, the US Dollar equivelant of the currency sold (even if that currency was Euro or Pound Sterling), and the statement, “this transaction was carried out within the scope of article 13 of the Türkiye Central bank Circular on Capital Movements”.
Is the International buyer olbiged to exchange the foreign currency with the bank?
The buyer, the seller, or their proxies or representatives of the relevant real estate are able to conduct the transaction.
Is there an obligation to exchange foreign currency in transactions for the citizenship by investment program?
The Purchase Certificate is now mandatory in all transcation where the buyer is a foreign real person, no matter what the purpose of that transaction may be.
Is another document required for citizenship transactions other than the foreign exchange purchase document?
In citizenship (certificate of conformity) transactions, the foreign exchange purchase document and the approved bank receipt showing that the said amount has been sent to the account of the seller will be requested by the land registry directorates.
As is currently the case, the buyer must also present the stamped bank transaction receipts along with this new requirement before the confirmation of investment document is issued by the land registry directorate.
Can the currency be exchanged at the bank after it is first transferred to the seller’s account?
The Foreign Currency may be sent first by the buyer to the seller’s account and then sold by the seller’s bank for exchange with the Türkiye central bank. The critical point here is that the foreign exchange purchase certificate must be otbained before the exchange of title deeds from the seller to the buyer.**
Are the payments made before the effective date of the application valid?
Payment receipts made before the effective date of the application will continue to be accepted in transactions. There is no need to issue a foreign exchange purchase certificate for these transactions.
However, for these payments, the stamped bank receipt must be submitted to the land registry office as before the new change.
It is not (and never has been) possible to accept payments made by liquid cash payment methods.
How are the receipts before the effective date of the application evaluated and how is the value declared to the title deed calculated?
In cases where the sales price is deposited into the account of the buyer before the effective date of the application, foreign currency purchase certificate is not required.
In this case, the calculation method does not change – the exchange rate applied is the Türkiye central bank effective selling rate one working day before the date of the deposit.
Is the base value for the calculation of purchase tax in the title deed transaction the Turkish Lira value in the foreign currency purchase certificate?
Parties to the transaction are obliged to submit the foreign exchange purchase certificate proving that the foreign exchange, which is the sales price, has been sold to the central bank, to the title deed administration.
The Turkish lira amount registered in the foreign exchange purchase certificate is declared to the title deed as the sales price by the persons concerned, and is the basis for the purchase tax.
In other words, yes.
Will the provisions of this circular be applied by the Land Registry Directorate in applications made before the change?
The provisions of this circular will not be applied for the applications that have been processed by the Land Registry Directorate before 24 January 2022, in other words, the procedures will be completed according to the current legislation at the time of application.