Why Invest In Property In Turkey

For those looking for a holiday home in the sun, Turkey offers an amazing 8,000 kilometres of coastline and is home to some of the best beaches in the world.
It is an area that has captured the imagination of a huge number of Irish property investors in recent times, most of whom have acquired homes in the south-western corner of the country.
There are many reasons for Turkey's increased profile. Property is still quite good value in most areas and, as we know, there's nothing the Irish like better than cheap property. There is also the low cost of living, about half what we are used to in Ireland, and this is certainly a factor for older purchasers.
Add sun, exceptional scenery, and wonderful sites of historical and archeological importance, and you can see why the Irish are making the trip to Turkey for more than just cheap holidays.
The country is a well-established tourist destination, having radically overhauled its infrastructure over the past ten years. More than half of its visitors come from Europe and it is the country most likely to take over from Spain as the most popular sunshine destination.
Turkey's four main tourist airports are Izmir, Bodrum, Dalaman and Antalya, but while access is excellent in the summer but you will have to look at flying through Britain in the winter. However, as more Irish people purchase property in Turkey this may well change.

Buying In Turkey

Freehold property or land may be purchased by foreign nationals subject to clearance from the military, which is usually a formality.
The purchase procedure is normally straightforward, provided the property is in the district “belediye'' or local council area.
It should be noted that Turkish financial institutions do not yet offer mortgages to foreigners, so any borrowing will have to be undertaken outside the country.
Within Turkey, personal loans are the only option for foreigners, but at rates of more than 15 per cent they are not particularly attractive. It is proposed that a mortgage system will be introduced soon, but it is unlikely that such facilities will be available to non-residents in the near future.
The currency in Turkey since January this year is the new Turkish lira. The rate of exchange is about NTL1.65 to €1, but euros will be accepted inmost cities and tourist areas. It is advisable that funds for any purchase be transferred into the country through a Turkish bank and specifically identified for that purpose.
The amount transferred should be sufficient to cover purchase costs plus fees, taxes and associated costs, so it is important not to underestimate what is necessary or the purchase cannot proceed. It is important to keep all receipts to prove the original purchase and enable easy repatriation should you decide to sell at a later stage.
Some agents quote all-inclusive fees, so you know exactly where you stand in terms of extra costs, apart from those incurred personally, such as legal and financial representation. Where this is not the case, typical agent's fees are about 6 per cent of the sale price divided equally between purchaser and vendor.
Approximately €700 or 1 per cent of the sale price, whichever is the greater, will be due in legal fees, depending on the amount of work involved.
Stamp duty is payable on acquisition of title deeds at 3 per cent of the sale price, usually split equally between buyer and seller.
Property tax is paid annually at a fixed per cent of the declared value. There is a tendency for locals to under-declare purchase prices to avoid transaction charges, but this is obviously not recommended, as the authorities are likely to clamp down on the practice as EU accession draws closer.
There is a 25 per cent reduction on the tax given on new house purchases until a revaluation, conducted after five years. You will also have to allow for building insurance, which is compulsory for most purchases, as is state earthquake insurance. All earthquake activity in the country is to the north and very unlikely to ever be a problem in coastal areas.
There is no double taxation agreement between Ireland and Turkey, although negotiations are ongoing and such an agreement is inevitable at some stage. There is no guarantee as to what will or will not be covered, although it is unusual for income tax and capital gains not to be included.
Up to year five, a capital gain realised on the sale of a Turkish property is taxed as income tax, banded at rates from 20 to 40 per cent. After year five, there is no capital gains tax. Annual property tax is at a rate of just 0.01 per cent.
You will very likely be told that local Turks avoid paying income tax where possible, which is correct, but as a foreigner you take this route at your peril.
Freehold resale costs are approximately 5 per cent (comprising sales tax, local documentation and legal fees) and proceeds may be repatriated after paying Turkish tax.
As the cost of living in Turkey is substantially lower than we are used to in Ireland, furnishing your property will be best done locally; electrical goods are also good value.