In this article, we will be explaining the real cost of purchasing a property in Turkey. As a natural result of the Turkish citizenship program, the most popular option is, investing $250,000 in real estate. Certainly, smart investors want to be well-informed about the financial details of opening a property turkey file in their lives.
PROPERTY TURKEY: THE ACTUAL COST OF PROPERTY PURCHASE
Many foreign investors are not aware of the monetary liabilities; hence, they end up paying more than its worth.
We can divide the monetary liabilities of your property Turkey file under two titles as follows:
- the ones to be paid while you are purchasing the property and
- the ones to be paid while you are keeping the property.
Fees and taxes to be paid during the purchase of a property in Turkey
title deed fee:
Title deed fee for 2021 is 4% of the purchase price in total. It used to be 3% until the end of 2019, but it has increased afterwards to 4%.
Buyer and the seller can equally share this 4% title deed fee. Thus, you have the chance to save the other 2%. On the other hand, generally sellers request the buyer to pay the whole 4% in practice. Especially if you are buying from a project, there is a high chance that they will ask you to pay all. For the real person owners, it depends on the local custom and seller’s motivation to sell.
revolving capital funds payment:
This fee changes, according to the location of the property. Because, every region has a coefficient announced by the general directorate of land registry. For most of the districts in metropolitan municipalities, the coefficient is 2,5. To clarify, you need to multiply the Revolving Capital Service Fee with the Regional Coefficient to calculate the exact amount. To provide a more detailed insight we have an example below.
For 2021, revolving capital funds is 171,25-TRY. Let’s multiply such amount with the regional coefficient of the property. For instance, a property’s Revolving Capital Service Fee in Şişli/İstanbul is 428-TRY, according to such calculation.
land registry service fee for foreigners:
This is a fixed fee, which is updated annually. For 2021 it is 800-TRY.
real estate agency commission:
This is not a mandatory fee or tax. However, considering the risks of buying a property in a foreign country, working with a trustworthy agent is the solution.
The legal maximum limit for the commission is 4% of the sales price. Just like the title deed fee, seller and buyer can share it equally. But according to the local custom, seller can ask the buyer to pay all.
Now, we are actually done with the ordinary financial liabilities. Nevertheless, aside from these four, there can be hidden debts of a property. Such as the unpaid maintenance fees or real estate tax. Therefore, we highly suggest you to get a comprehensive background check beforehand. After all, an outstanding tax or fee debt from past is always an unpleasant surprise. Or you can just contact Turk Fortune team and relax while we deal with it.
Fees and taxes to be paid after the purchase of a property in Turkey
After the purchase, you will have to pay an annual property tax. You can pay the property tax in two instalments within a year. Due dates are at the end of May and at the end of November.
Calculation tariff for property tax varies depending on the property’s features. It depends on its location, building’s material, age, size etc. To specify, if its a house located in metropolitan municipality (Istanbul, Izmir, Antalya…), property tax is 0,2% of its value.
cultural heritage protection fee:
It’s 10% of the property tax and similarly, paid in two instalments in May and November.
mandatory earthquake insurance:
Aside from the annual fees, owner of a property is obliged to pay the premiums of insurance every year. Calculation depends on the size of the property, construction year, location and some other variables. For an average apartment in Istanbul, it is around 250-TRY per year.
Usually, you will be paying this with your water bills monthly. Calculation depends on the usage of water. It is 0,5-TRY per cubic meter at metropolitan municipalities.
In addition to these, of course there will be your bills and maintenance fees depending on the property.
Normally, anyone who wishes to buy a house from a company must pay VAT. VAT rate can change according to the project but on average, it’s 8%. However, VAT obligation is not applicable to some foreign investors.
Of course, there are some requirements to benefit from this exception. First, foreign investor shouldn’t hold a valid residence permit in Turkey. Second, property must be for sale directly from the developer. In other words, it mustn’t be a second hand property. For instance, if you are buying the property from a company who is not the constructer, you’ll pay VAT. Furthermore, you have to apply for tax exemption before you legally own the property, before the purchase. However, you have to pay at least half of the purchase price before applying for exemption. Certainly, this is exactly why it is important to work with trustworthy real estate agents.
On the bright side, purchases from real person sellers are usually not subject to VAT. This is regardless of the fact if they are second hand or not.
The maximum area that a foreigner may acquire can not exceed 30 hectares in Turkey. Plus, it can not exceed 10% of the related district’s surface area. All foreigners regardless of their nationality have to follow this restriction.
In addition to the area limitation, there is also a nationality restriction. Citizens of North Korea, Cuba, Armenia, Syria and Republic of Cyprus can not purchase property in Turkey. On the other hand, these restricted nationalities may change with the decision of the presidency. Therefore, the best is keeping in touch with a trusted team in Turkey and asking about the current situation. Besides, property purchase limitation does not means that the citizens of these nations can never apply for citizenship. They can still apply via other options such as bank deposit or fixed capital investment.
Before sending any down-payments to any property, it’s best to contact a trusted team in Turkey. A competent team can run a proper due diligence check on title deed. Because you should keep in mind that not all properties are worthy of their price. Most importantly, only a professional team can assist you for the purchase. Especially when it comes to applying for VAT exemption.
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