Additional property costs
Taxes and insurance
Dealing with property taxes and insurance in Turkey can get complicated. Use a lawyer and know the tax system.
When you buy a property in Turkey, one of the first things you need to do is make sure that the property taxes have been paid by the previous owner. If they have not, you will take on those debts, so make sure to ask the seller for any relevant tax receipts. Better still, have your lawyer insert a special clause into the sales contract that protects you from incurring the previous owner´s debts.
All property tax rates are the same for Turkish nationals and foreign residents.
The tax base is the property´s declared value, which you provide to the tax office. Normally, you will declare lower than the actual value to reduce taxes. However, note that if there are developments in the area that lead the Turkish government to exercise eminent domain (construction of a new highway or discovery of an archaeological site), only the property´s declared value will be compensated.
Taxes on property purchases in Turkey
When you first buy a property you will need to pay a buyer’s tax (1.5% of the property´s declared value). You will also be required to pay several one-off tax fees, including a stamp duty on the purchase documents. Stamp duty varies with the cost of the transaction, but will usually fall between 0.15% and 0.75% of the property´s value. Naturally, higher value transactions command higher stamp duties.
You will also pay an 18% value added tax (VAT) when you buy a property.
If you ever sell your property you are liable for a 15-35 % capital gains tax (CGT) on your profits.
Property tax in Turkey
Turkish property tax (emlak vergisi) is paid yearly by the person who owns a property on 1 January. It is collected by the local town hall (belediye). The base for this tax is the property´s notional value (nominal değer), not its declared value. Notional value is determined entirely by the municipality in which you live. Though you have a right to appeal a valuation, most of the time municipalities do a fair job of valuing property.
You will also have to pay local property taxes, and you alone are responsible for knowing the rates and paying them. If you have questions and speak reasonably good Turkish, try asking the local elected official (muhtar) who handles taxes. Otherwise, try your luck at the town hall. Speaking very generally, however, local property tax should not exceed 0.3% of your property´s declared value.
A thorough, yet easily comprehensible breakdown of Turkish property taxes is available at Property Tax International.
In Turkey there are two types of property insurance: compulsory and non-compulsory. Compulsory insurance consists only of earthquake (or disaster) insurance, known as DASK.
Non-compulsory insurance can be bought privately according to your wishes. There are many types available, including fire and theft insurance. You can find out more by contacting insurance agents or brokers.