Buying Property
Turkey property market is usally described as one of the most dynamic emerging markets in Europe. With property prices much lower than in other Mediterranean resorts, the potential for capital appreciation in Turkey is significant and investors are keen to capitalise on the expected boom while property is still cheap.
The country attracts over twenty five million visitors a year and, and is looking to further capitalise on its rich endowment of cultural and natural attractions. Prices in many coastal resorts have doubled in the last two years due to the ever-increasing number of tourists and demand on local market for holiday properties, suggesting that this is a prime time to buy in Turkey.
Figures from the Turkish government show that foreigners invested in excess of $1.3 billion in the Turkish property market last year, particularly those from the UK, Ireland, Germany and Canada.
Turkey’s property market received a further boost with the passing of a bill in Turkish parliament in February this year which will make mortgages available in the country for the first time. This will further boost the Turkish property market to new levels, encourage further growth in tourism, offer more opportunities for buy-to-let investors and consequently cause property prices to rise.
Property purchase process
The standard purchase process in Turkey includes the following stages:
Once you have found your chosen property and your offer has been accepted, you will be asked to pay a reservation deposit (usualy 10%) which will take your property off the market. At this stage your lawyer will need to carry out all necessary checks regarding the title deeds, building license and associated planning permission checks.
Once the checks have been completed and satisfied, a private purchase contract is drawn up.
The title deed transfer takes place at the Property Register Department. The buyer and the seller need to be present during this transfer.
Property purchase costs
Stamp duty tax of 1.5% has to be paid by both the seller and the buyer during the transaction.
An average of 3% of the purchase price is payable for the estate agent’s commission.
VAT is payable on Turkish real estate at 18%, and is payable on the sale of buildings under 150 metres square at 1%.
1.5% of the purchase price is payable when transferring the title deeds.
Personal income tax is based on capital gains and rental income, with the rate of 20% for companies and 15 - 30% for private individuals. If the property is sold within five years of ownership, the personal income tax will apply on the difference between the price of acquisition (adjusted for inflation) and the selling price.
After five years of ownership, personal income tax is not charged on the gains.
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