TÜRKIYE Law and Practice Contributed by: Serkan Gül, Nazım O Kurt and Türkay Avanaş, Hergüner Bilgen Üçer Attorney Partnership
total square metres and/or the value per square metre. Capital Gains Tax Income tax is assessed on the selling asset- holder. For individuals, the applicable rate is between 15% and 40%, but capital gains tax is not assessed for individuals who are not pro - fessionally engaged in the trade of real estate and who held the sold property for five years or longer. For corporations, the capital gains tax In share sale transactions, VAT and capital gains tax exemptions apply as long as the transferred shares were held by the selling entity for two years or more. Share purchase agreements are exempt from stamp tax following a recent change in the law. 2.11 Legal Restrictions on Foreign Investors rate is 25%. Exemptions Foreign legal entities may not acquire real prop - erty in Türkiye unless they are allowed to do so under special laws, such as the Petroleum Law, the Tourism Law or the Industrial Zones Law. To overcome this legal barrier, investors often choose to establish Turkish special purpose vehicles (SPVs). Turkish-incorporated compa - nies with 50% or more foreign share owner - ship and/or management control are subject to approval by the governorship before they can acquire real property in Türkiye. Turkish-incorpo - rated companies in which foreign ownership is under 50% and where management is not under foreign control can acquire real property just like domestic concerns where all shareholders are Turkish nationals. The governorship approval procedure involves an investigation of whether the real property is in
a military forbidden zone, military security zone, strategic zone or private security zone. If it is, then the acquisition is subject to clearance from the military or the provincial police directorate, depending on which of these exercises juris - diction over the relevant sensitive area. If not, approval for the acquisition is routinely granted. The process is completed within approximately one month. The establishment of mortgages in favour of foreign capital companies, leases of real property by foreign capital companies, and the acquisition of real property in OIZs, technol - ogy development zones and free zones are not subject to the foregoing approval process. Acquisitions of commercial real estate are gener - ally financed by loans and sales revenue gener - ated from the project. REICs, REIFs and lease certificates are capital market instruments used for financing options for acquisitions of large real estate portfolios or companies holding real estate. 3.2 Typical Security Created by Commercial Investors There is no security specifically used by com - mercial real estate investors. Generally, securi - ties such as mortgages, share pledges, personal guarantees, assignments of receivables, etc, are used for real estate-related funding. Mortgages Two types of mortgage are recognised under Turkish law: the principal amount mortgage and the maximum amount mortgage. 3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate
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