The United States remains one of the most attractive real estate markets for international investors, including those from TURKEY. Whether acquiring a hotel, a multifamily residential building, a commercial office property, or a logistics facility, Turkish investors must navigate a distinct legal framework governing property acquisition, financing, title, taxation, and ongoing asset management.

The U.S. commercial real estate market is the world's largest, with total investable stock estimated at over $20 trillion. For Turkish investors, the U.S. offers several structural advantages:

• A transparent legal system with strong property rights
• A liquid market with active secondary trading
• A deep financing market with competitive debt terms
• A dollar-denominated asset class that provides currency diversification

The principal U.S. real estate asset classes attracting Turkish capital include multifamily residential (apartment buildings), hospitality (hotels and resorts), industrial and logistics (warehouses and distribution centers), retail (shopping centers and net-lease properties), and office.

Turkish investors acquiring U.S. real estate must choose an appropriate acquisition structure:

Direct ownership through a U.S. LLC: The investor forms a U.S. LLC to hold the property. This provides liability protection and pass-through taxation. However, direct LLC ownership by a foreign individual or company creates FIRPTA withholding obligations on sale and subjects the investor to U.S. estate tax on the value of the U.S. real property interest at death.

Foreign corporation holding a U.S. LLC: A Turkish company (or a holding company in a tax-favorable jurisdiction) owns the U.S. LLC. This structure can mitigate U.S. estate tax exposure for individual investors and may provide other tax planning benefits, but introduces branch profits tax considerations.

REIT or fund investment: For investors seeking passive exposure without direct property management, investment through a U.S. Real Estate Investment Trust (REIT) or a private real estate fund provides liquidity and diversification. However, REIT dividends paid to foreign investors are subject to withholding tax.

The optimal structure depends on the investor's tax residency, the size and nature of the investment, financing arrangements, and exit strategy. Proper structuring before acquisition — not after — is essential.

U.S. real estate transactions involve a comprehensive due diligence process that differs significantly from Turkish practice:

Title search and title insurance: A title company searches the public records to identify any liens, encumbrances, easements, or defects in the chain of title. Unlike TURKEY, where the land registry (tapu sicili) provides a government guarantee of title, U.S. title is not government-guaranteed — title insurance is therefore essential.

Physical inspection and environmental assessment: A Phase I Environmental Site Assessment (ESA) is standard for commercial properties and is typically required by lenders. Environmental liability in the U.S. can be strict, joint, and several — meaning a buyer can be held liable for contamination caused by prior owners.

Zoning and land use review: The property's permitted uses, development rights, and any variances or special permits must be verified. Zoning regulations in the U.S. are administered at the local (municipal or county) level and vary significantly.

Lease review: For income-producing properties, a thorough review of all leases — including rent rolls, lease abstracts, tenant estoppels, and SNDA agreements — is essential to understanding the property's cash flow and risk profile.

FIRPTA is the most important U.S. tax law for foreign real estate investors to understand. Under FIRPTA, when a foreign person sells a U.S. real property interest, the buyer is required to withhold 15% of the gross sales price and remit it to the IRS.

This withholding is not a final tax — it is a prepayment against the seller's U.S. tax liability on the gain. The seller files a U.S. tax return and either receives a refund (if the withholding exceeds the actual tax) or pays additional tax (if the withholding is insufficient).

Turkish investors should plan for FIRPTA withholding in their cash flow projections and explore available exemptions and reduced withholding certificates where applicable.

Foreign individuals who directly own U.S. real property are subject to U.S. federal estate tax on the value of that property at death. The U.S. estate tax rate is 40% on the taxable estate above the applicable exemption amount — but for non-resident aliens, the exemption is only $60,000 (compared to $13.6 million for U.S. citizens and residents).

This means a Turkish investor who directly owns a $5 million U.S. property and dies could face a U.S. estate tax liability of approximately $1.97 million. Proper structuring — typically through a foreign holding company — can eliminate or substantially reduce this exposure.

Turkish investors can access U.S. real estate financing through U.S. commercial banks, international banks with U.S. operations, debt funds, and insurance companies. Foreign investors typically face more stringent underwriting requirements than domestic borrowers, including:

• Higher down payments (30–40% for commercial properties)
• Personal guarantees
• Additional documentation requirements

Loan-to-value ratios, debt service coverage ratios, and interest rate terms vary by property type, market, and lender.

Owning U.S. real estate involves ongoing legal and compliance obligations:

• Property tax payments (assessed annually by local governments)
• Landlord-tenant law compliance (governing lease terms, security deposits, eviction procedures, and habitability standards)
• Building code and fire safety compliance
• Americans with Disabilities Act (ADA) compliance for commercial properties
• Annual tax filings (federal Form 1040-NR or 1120-F, state income tax returns, and FBAR/FATCA reporting)

Turkish investors should plan their exit strategy at the time of acquisition, not at the time of sale. Key exit considerations include:

• The tax treatment of gain on sale (capital gains rates, depreciation recapture, FIRPTA withholding)
• 1031 exchange eligibility — allowing deferral of capital gains tax by reinvesting proceeds in a like-kind property (available to foreign investors)
• The timing of the sale relative to the investor's overall U.S. tax position

ULF New York works with Turkish real estate investors from initial acquisition structuring through ongoing asset management and eventual exit, providing integrated legal and tax planning advice at every stage.