Clearly the most important question to answer before buying property in Turkey is to satisfy yourself that it meets your requirement for buying.
These may include:
- A low-cost and pleasant retirement option
- A sound property investment which promises good returns
- A regular holiday destination
- Somewhere you (and, where appropriate your family/partner) really want to live
- A second-home to be used occasionally
- A holiday letting opportunity
You must be certain that once you've established your basic "why I'm doing this" criteria that Turkey provides the right answers or most of them - bearing in mind that there are always pros and cons.
For example if you want to retire to Turkey you may want to do so because it allows you to cash in your property in the UK, downsize and use the spare capital to buy a property in Turkey. On the plus side you will be able to live in a beautiful location with an agreeable climate amidst very pleasant and helpful people. Your tax burden may also be lower. On the minus side there may be health issues you should consider and you may find the peak summer temperatures too hot.
So be very careful in your decision-making and remember that forward planning is very advisable especially as regards taxation.
Other reasons for buying in Turkey:
- It's now fairly well-established so there are property and legal specialists who can ease the process
- Thousands of British people have bought in Turkey and are happy with the results
- Property prices are still relatively low, especially compared to London and the South East of England and other prosperous parts of the UK
- Property values in desirable locations are rising
- The growth and success of the Spanish property market is an indicator that the Turkish market will follow suit
- The warm climate means lower heating bills
- In some locations there are established expat communities
- Turkey may well join the EU. If so this will ease the whole process of buying and living in Turkey.
- EU - and prospective EU membership - will likely have an upward impact on property prices in desirable locations in Turkey.
- Turkey is one of the fastest-growing tourist destinations in the Mediterranean.
- More and more flights to Turkey are available than ever before and that provision will almost certainly grow.
Check-list when purchasing property:
Before signing a title deed (tapu) you should have dealt with the following:
- If necessary prepare power of attorney
- Check you have all the necessary documents
- Check all inquiries have been dealt with positively
- If you have a mortgage ensure everything is in place
- Confirm date, time and place for completion with the land registrar
- Confirm date, time and place for completion with the seller
- Make sure the money required has been sent to Turkey
- Get rules of community or management plan
- Ask if any more searches are needed
- Make sure any insurance cover - if necessary - has been arranged
- Ask for proof of payment of bills and local taxes and fees, if property is not new
- If property is under construction check for defects and sign off as appropriate
Taxes: you will almost certainly be liable for taxes in Turkey and also for UK taxes if you're receiving certain types of income - such as from rental lettings.
The wisest course of action is to ask an expert to advise you on how best to handle your affairs. Your property agent will be able to advise you.
Some taxes (a brief outline):
- Property tax: this is calculated on the notional value of the property, usually the notional value of the property multiplied by the tax rate fixed in the locality.
- Environment tax: the tax paid for rubbish collection
- Town halls can raise taxes to pay for projects or to cover shortfalls
- Payment: it's generally the taxpayer's responsibility to know the amount due and the date it's due by. The local elected official (ward representative) will know. These local taxes are low, say about 0.3% of the declared value of the property.
Income tax
- Non-residents will probably be liable to income tax on income generated from land and buildings in Turkey, such as income from lettings.
- Income from capital invested in Turkey may be subject to income tax
- Earned income in Turkey is subject to income tax (rates are similar to the UK )
- Employment taxes are deducted at source, others are usually paid in the calendar year following
Wealth tax: No Turkish wealth tax on assets owned or held in Turkey
Capital gains tax: May be due on capital gain made on the sale of real estate in Turkey. If the gain was made on the sale of a residential property bought more than five years' before then the gain won't be taxed. If the property was bought within the previous five years then the gain is taxed as income tax.
Inheritance tax: This is based on share of inheritance and not the total estate of the deceased. Individual beneficiaries could pay different amounts of tax depending on their circumstances. Assets must be declared for purposes of UK taxation but double taxation relief applies so those concerned don't have to pay the same tax twice. Inheritance tax rates range (at time of writing) from one to 10 per cent depending on amount of inheritance.
Remember: In Turkey you pay taxes on worldwide income. So you may have to pay Turkish, rather than UK, taxes on some UK pensions though not all. You will still be liable to UK capital gains tax if any estate sold is in the UK.
It's imperative you seek independent and expert tax advice, especially if you decide to become resident in Turkey.
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