This query comes as something of a recurring concern for most overseas investors interested in securing a home in Turkey – who require an accurate breakdown of all the costs associated with the venture.
What these people want to know, particularly, is the expense that they would have to incur in addition to their chosen property’s upfront market purchase price.
As per a simple rule of thumb (and the advice of most property dealers associated with the local field), all foreign investors looking to attain property in Turkey can do well to carry an extra cash amount equalling eight to nine percent of their residences’ purchasing price to see to these overhead cost figures.
These are one-time expenses – different from the ongoing, home maintenance costs that they would otherwise have to account for.
Let’s see how these costs play out in real terms!
Consider this example
Take the case of a foreigner who recently finalised a home-purchase agreement with a local (Turkish) seller. After fulfilling all initial payment requirements, he (or she) will need to submit all applicable purchase costs (the ‘8-9%’ mentioned above).
Now based on the assumption that the property was bought for €350,000, the additional (purchasing) cost incurred would amount to €28,000-€31,500.
Let’s look at all these charges one-by-one – which, when considered against the similar expenses imposed by several Continental European countries, are relatively low.
All in all, buyers are required to pay a Title Deed Fee, a Stamp Duty, Value Added Tax, a Solicitor’s Fee, Property Insurance, and a Paperwork Approvals fee. The Turkish government, as such, has stipulated specific rules for the declaration, calculation, and payment of these taxes.
1. Title Deed Fee
Both property buyers and sellers are required to pay a title deed fee prior to finalising their property transfer agreements. The parties concerned are (individually) subject to a tax rate payment – calculated at 1.5% of the total selling price.
2. Stamp Duty
Also known as the ‘Turkey Property Buying Tax’, this tax rate is usually calculated at 1% of the property’s declared (or assessed) value. Under Turkish laws, owners are required to quote at least 60% of their property’s initial purchasing price in their assessed value declarations – which the authorities always take care to verify.
Buyers are required to pay their assigned stamp duty following the registration of the property title deed in their names.
3. Value-Added Tax (VAT)
As per the government’s revised tax regulations announced in 2017, foreign buyers are no longer required to pay value-added tax on the purchase of their first property in Turkey. To avail this provision, however:
- The property must be purchased with foreign currency
- The seller must have held the property for at least 12 months (prior to the transfer)
The Turkish government has notified different VAT (or Katma Değer Vergisi – as they are referred to in the local parlance) rates for residential units – provided these properties fulfil certain conditions. For example, the executive has set VAT rates between one and eight percent for residential properties whose total surface area falls below 150 sqm. On the other hand, owners of residential units with areas exceeding 150 sqm are liable to pay a VAT tax rate of 18%.
4. Solicitor’s Fee
It goes without saying that foreign buyers – aiming to set up home in whichever country – require the assistance of local legal experts to commence with (and conclude) their property purchasing efforts. The same holds true for expats to Turkey.
An individual solicitor can be contracted for several thousand euros. Clients, as per their contractual obligations, are required to submit legal fees following the finalisation of their property purchasing agreements.
5. Property Insurance
This cost can be categorised into compulsory and non-compulsory expenses: the former consists of an earthquake (or disaster) insurance facility, locally referred to as DASK; while the latter (which comprises insurance against fire and theft incidents) can be acquired through the assistance of insurance agents and brokers.
6. Paperwork Approvals
These services can be availed for several hundred euros.
It must be mentioned here that the costs of purchasing properties in Turkey are low as compared to other European countries – including France, Italy, and Spain – where consumers have to pay more for all the services and facilities listed above.
The availability of this property-acquisition (regulatory) framework at affordable rates puts Turkey into the list of the most sought-after residential destinations in the world. So go ahead and pick your desired property in this amazing country; without undergoing the rigors of having your brain hijacked by all the ‘paperwork stress’ that you would need to put up with elsewhere.[/vc_column_text][/vc_column][/vc_row]