Following our article on web searches for agents, here we assume that you have identified which area you would like to buy in, and have made a shortlist of agents who you feel have fulfilled the criteria which were discussed in the previous article. In this article, we aren't covering the agent subsidised inspection trips as they need an analysis all of their own!

The first decision is the time of year you visit Turkey to approach agents in your quest to find a property. There are benefits and drawbacks to different seasons and the opportunity to combine a house-hunting trip with a holiday can affect the process significantly.

If you choose to go in the summer season (May - September), then care must be taken to deal with staff who have not been recruited just to deal with the summer rush. Of course, many agents will employ staff with good local knowledge but make sure this is the case. Also, be aware that agents are very busy during the peak holiday months of July and August and so can appear to be a little rushed. You can find yourself being escorted from one property to the next with little opportunity to ask questions and take things in. You need to be in control here and you should let the agent know if you feel uncomfortable at the speed of events. On the other hand, bear in mind that good agents have to tolerate a lot of time-wasters during summer and while this does not excuse an overly fast pace, a good relationship with the agent is a mutual affair. A key issue in summer is the 'silly season' mentality. This takes the form of inflated prices where some vendors (and agents) place unrealistic asking prices on properties in the hope of catching a holidaymaker unawares.

The low season months are, in our opinion, a better proposition. The 'hard-core' genuine agents will still be in the resorts and will have more time to dedicate to clients. You are, therefore, less likely to be rushed and will have more time to see your selection of properties. April, and particularly, late September offer a chance of lovely weather for a viewing trip. Two things to check though, whichever time of year you choose. The first is flight availability and cost. This is becoming less of a problem in the winter months with more services to resorts beginning all the time and we'll run a story on this shortly. Secondly, many of the main overseas property exhibitions take place in the low season so make sure you can attend one or more before you go (again a piece on these is on the way).

Prior to travelling, if you have selected particular properties from an agent's website, make sure that these properties are for sale on your departure. Unfortunately, as we mentioned in our previous agent article, many properties are on offer from multiple agencies (far more than in the UK) and are sold by one agent without any notification to others. If your chosen properties are unavailable, insist on an up-to-date availability list but be prepared not to see everything you would like to.

1. Check that your web search has yielded a genuine agent. Ask around in the area for (independent) ex-pats who might know.
2. Let the agent know that you are serious and have done your research. This will start the relationship on a firm footing.
3. Come clean. Let the agent know your specific requirements. After this, if they try to insist on viewings of inappropriate property (or property the agent seems to be unusually keen to sell), walk away.
4. Agents (as with people in general) in Turkey are extremely good hosts and will offer you refreshments and sometimes food. This is quite normal and should not be taken in the wrong spirit.
5. Ask questions. Does the property/land have good title? Are there any restrictions on foreigners buying in the area? (see article on law)
6. Don't succumb to pressure tactics and flannel.
7. Do not sign anything without understanding exactly what it is.

We have come across agents who you to sign a contract in which you agree to pay their 3% commission if you buy the property before you even have a viewing as they are (unusually) the sole agent. This is, of course, standard in most countries for vendors, but may come as a shock for the first time buyer in Turkey. In fact, we think this is a good sign. While the combined 6% fee the agent will receive from the buyer and seller is steep by European standards, this is a sign of an agent who is trying to stamp out the practice of unscrupulous 'agents' trying to sell the property from under the genuine agent's nose. The legality of such a contract is questionable but the sentiment is, we feel, correct. Here is an example of how a sale process in Turkey might happen:

A vendor is selling a property and approaches agent B to advertise the property (as sole agent). Agent B does this but 'agent' C (who we will refer to as the 'fake' and may be an agent or not ) sees the property on the website and duplicates the details on his/her site. Agent B is set for a commission on a sale until the 'fake' agent approaches the vendor with a client and offers to take only 1% for a sale. The vendor agrees and the buyer pays the 'fake' agent the full 3%, meaning the pseudo-agent receives 4% commission by 'stealing' a sale. The vendor informs the genuine agent B that they are withdrawing the property from sale leaving agent B with marketing costs and time spent showing the property for no return.

There are variations on this theme and while we understand that everyone needs to make a living, if you are a buyer, you need to be aware of the mechanisms which may be at play behind the scenes. Admittedly, the agent who asks you to sign an agreement promising to pay a commission regardless, is attempting to safeguard their interests, but at the same time is improving the transparency of the process. We think that this is key in any developing market as experiences buyers have had in other countries in the past confirms.

Again, we must state that this is not an exhaustive guide, and may state the obvious to seasoned investors but we hope it will provide a starting point. Please check back for additions to this piece or subscribe so that you don't miss future articles.

Tags: real estate agents Turkey, tips on buying property Turkey

A little over 10 days ago the Turkish Central Bank rates for Sterling stood at YTL2.35 (New Turkish Lira), today the rate was YTL2.63 (rates on the 'Tools' page). Their has been speculation for about a year now that the currency was over-valued and this seems to have translated into action. Dow Jones News Wires report that large investors are dumping the currency with concerns over the country's ability to repay loans on time to the International Monetary Fund (IMF). Other concerns seem to be higher than expected inflation figures for April - driven by oil prices. More in our forum on future speculation or here for a Reuters report

In short- no. Our simple advice is to spread your investments and if you have large deposits in Lira, perhaps think about moving some elsewhere. The primary concern should be the reason for any currency investment in Turkey. If you live in Turkey, it makes sense to have more of your money invested there as costs of continual exchanges can add up in commissions. If you are a speculator, this probably isn't the right article for you to be reading but if you are planning to buy a Turkish property, you really need to understand the process even if the recent exchange rate movement means that the overseas (sterling) buyer actually benefits .

If we take the exchange rate today as £1.00=YTL2.60, then the YTL1,300,000 exchange would be equivalent to £50,000 (minus bank commission)

Two weeks ago, when the transaction was arranged, the exchange rate stood at £1.00= 2.35YTL. The YTL1,3000,000 exchange would have been equivalent to £55,319 (minus bank commission)

It is easy to see that the Turkish property has dropped in sterling price simply because of a currency adjustment but it is important to remember that the opposite would apply if the Turkish Lira strengthened.

This model assumes that the vendor of the property does not increase the price, knowing that this currency movement has taken place. This is an extremely underhand tactic and you are advised to walk away if this happens.

Essentially, there are two methods but both will involve using a specialist currency broker and while this might be useful for residents exchanging living expenses to Turkey, it is primarily for large exchanges. Currency brokers can remove some of the uncertainty of an exchange into Turkish Lira. The first method is known as a 'spot trade'. With this method, you buy all of your currency in advance at a fixed rate, which is fine if you have the money available to do this. If you do not have all the funds available in advance, you can use a second method known as a 'forward trade'. Usually, these trades are commission free and the following is an example of how this works:

• You take out a contract with a currency broker to buy £50,000 of Turkish lira in 3 months from 15th May at a fixed rate of £1.00=YTL2.60. Total you will receive=YTL1,300,000

• You pay a deposit of 10% on the contract for £5,000 (the broker holds this)

• In 3 months (15th August) you buy the remaining £45,000 of Turkish lira at the rate you agreed on 15th May. Total you actually receive=YTL1,300,000

With this scenario, you know how much you will have in Turkish currency on a fixed date in the future and if this security appeals and you have signed a contract with a vendor/developer for a fixed price, it is a sensible method to employ. The forward contract can be extended significantly if you purchase is an off-plan development with staged payments and you could take out more than one contract at different rates. One thing to remember is that while the brokers might claim that their contracts are commission free, in reality they will accrue interest on your deposit. They will also gain from making large trades using your and other people's contracts combined on the same day and while this is not to say that their service is a bad one, it should be taken into account.

Above all, remember that you are at the biggest risk if you agree a sale price for a property in Turkey, in advance and then wait to exchange the money until the day it is required. You may be fortunate and find that, as in recent days, you gain, but equally you may lose significantly. However, if using a bank on the day still appeals to you, check in advance how much their commission will be as this varies considerably.

Tags: Turkish Lira foreign exchange, Turkish property

In the last two years 21,000 houses have been bought by foreigners in the Aegean Region according to government statistics. British citizens are taking the lead and the most popular area is Didim. The estate market gained an acceleration in the Aegean region after new laws came into force earlier this year relating to the terms and procedures for foreigners to purchase freehold property and land in Turkey. Continue reading in The Fethiye Times.......

Tags: Buy Turkish Property

A. By default, yes, but only after you have confirmed your subscription. For those who wish to remain anonymous you can choose to keep your e-mail address private, in which case it appears in our list as "anonymous." Otherwise your e-mail address is visible to us, so you need to trust us.

To subscribe anonymously, first register with FeedBlitz, then edit your profile and enable the privacy setting. All current and future subscriptions (to any other site's news) will hide your e-mail address from us or any other publisher unless you change this setting back. To sign up now for all Turkish Property Help content (using your e-mail address) from our Feedblitz news feed, click here to go to the subscription page. If you're not sure about what to do, or what all this 'Feed' talk is about, take a look at this article.

We will only use your e-mail to send you premium articles and news from this site. We will not use your e-mail for any other purposes. It is that simple. However, if you are still worried about privacy, you can create a free e-mail account just for this type of subscription. Read the complete Privacy Policy.

Tags: Earthquake Turkey

An agent in Bodrum said to me in 2005 that she estimated there were some 3000 people calling themselves estate agents in the busy summer period! Whether this is accurate or not, it gives you an idea of the scale of your problem. Most people will begin their search on the Internet, which is a great tool for initial sorting before you travel to Turkey. At this point I would like to state the obvious - think how you would rate an agent in your country and apply those criteria to the Turkish agents.

The first questions might be: who runs the agency and where is this agent based? Remember that (officially, at least) all Turkish agents must have passed the government approved scheme for real estate brokers (more in a later article) so if your agent is, for example, a 'wholly British owned and run', you should check that somebody at the agency is qualified to work as an agent. In reality, this usually means that the agent employs Turkish nationals to satisfy the regulations. This is not necessarily a bad thing - just something to be aware of, but it can mean that the overseas agent is merely 'piggybacking' on the local knowledge of the Turkish employee rather than having put the time and effort in to acquire the knowledge themselves.

You should also be aware of the location of your agent with regard to your choice of property as you really want an agent who has specialist local know-how. Bodrum and Altinkum are worlds apart in property terms so why would an agent have a detailed understanding of both markets? On a related subject, look out for freephone numbers, and in the UK, numbers with prefixes like '0702'. These are non-geographic and anyone can forward them to a Turkish number ( usually at the agent's expense) to give the appearance that they are based in your country. For instance, we have a non-geographic fax number of +44 (0) 870 912 7207 which sends faxes to our e-mail if when we are in Turkey so this may not be sinister, but if the website makes a big play on being local but you suspect otherwise, ask questions!

Websites themselves can appear slick but can also hide the truth so try to cross-reference the site to see if anyone has commented on the agent. Look for clearly presented information with verification from 'official' sources. You want an agent to let you decide based on good website content - not inflated sales talk.

On the site, look for:

• A track record . If there isn't one, ask why but remember that not all new agents are bad

• Contact details, including a physical location and land line (an office) in the area of your choice - not just trying to cover all areas without knowing them and not simply a foreign subsidiary with no experience in Turkey

• Check the basic facts on the site: some agents who operate sites dedicated to Turkey make elementary mistakes but others, who claim to offer portal services covering many countries, can pay liitle attention to the specifics of the Turkish market. Here is an example of this where both the factual dates and future political developments are simply wrong.

• The level of service on offer (Ask what you get for your commission as it's high by UK standards and Sole Agent status is practically unheard of). Importantly, confirm whether the agent will organise the necessary certificates and permissions (more soon).

• Lots of freely available information not just quick summaries making everything seem a breeze. Has the agent taken care & time over their site or is the information limited, incomplete or contradictory.

• High quality language usage - not sloppy translations. This is not difficult to achieve and is an indicator of attention to detail.

• Check that the site is not one of many, which all track back to one individual offering the same properties at different prices (e--mail us if you are unsure how to do this). Similarly, look out for identical wording on sites. This may be a sign of a duplicate site, but may simply be the sign of laziness or a distinct lack of knowledge.

Finally, ask the agent what company status their agency has. Is it incorporated in Turkey/your country and can they prove this? Remember that limited companies are not a guarantee of trustworthiness but do offer you a paper trail to check. In Turkey they must display a certificate on the premises which proves that they are a registered company and that they are tax payers. In the UK, you can check limited companies online to see if they are actually trading and for a small fee, check their accounts. This is probably true of other countries and we will update this information when we have it. Visit the Companies House website (for UK limited companies) and type in the name of the firm. The key mistake not to make, is to negotiate a property purchase from a barman or waiter, no matter how charming they are.

This is not an exhaustive guide but it should set you on your way. Please be cautious in selecting an agent and remember that you are contemplating a major investment. We will cover agent's relationships with developers shortly as this is also a key concern but for now we hope you feel more confident searching on the web.

Tags: estate agent Turkey

It seems that the regional tax office responsible for the Kalkan area is targetting foreign investors for spot checks to establish exactly who is staying at their properties in Turkey. This signals a move by the Turkish authorities to clamp down on a previously lax area of revenue collection. Many overseas owners are unaware of their obligations regarding filing personal income tax returns on rental income whilst others have ignored the law as it had not been enforced.

Tax Inspectors are apparently visiting properties and asking for proof of ownership/residency, which of course many renters cannot provide. Unless family ties with the owner can be proved, the possibility of punitive fines being imposed is very real. It must be added that a Double Taxation Agreement between the UK and Turkey is in operation but that the landlord is responsible for ensuring that they comply with the taxation laws of both countries.

This development may be seen as negative, not least by those caught out by inspectors, but it does offer real evidence that the Turkish property/taxation systems are developing. Jones Lang LaSalle ranked Turkey 46th of the 51 countries surveyed in their 2004 Global Real Estate Transparency Index, stating that it is an "opaque" market (more on this in an upcoming post). Some might argue that the Turkish authorities are going after soft targets for rich pickings in the Turkish property market but other developments in the Turkish tax system detract from this point of view. One example is the new automated online income tax filing system, which seems as if it will be at least as good as comparable EU versions and is an attempt to tackle the large 'black economy'.

In any case, the warning shots have been fired. If you are renting your Turkish property, now might be a good time to sort out your Turkish tax affairs (and how they relate to your country). See our previous post on Turkish property taxes for more and visit here and check section 7.3.10 for Turkish income tax rates, which are used to determine your rental tax liability in Turkey. If the lessee is a Turkish tax payer, they are reponsible for withholding this amount but if you let to a non-Turkish tax payer, you must file an Income Tax Return. For more background information, you can go to the Turkish Revenue Administration site. We will publish the 2006 tax rates which are relevant to rentals (and some worked examples) in a syndicated article, shortly.

Please sign up for this free content by entering your e-mail in the box on Subscription page. You can unsubscribe at any time.

Tags: property tax Turkey

1. Search fees: up to €1150.00 (£800.00), although this can be much less

2. If you are at the signing of the title deeds (tapu) and do not speak fluent Turkish, you must use a certified translator: up to €115.00 (£80.00)

3. If you are buying a resale property (not new build) and you buy through an agent, the agent will charge: 6% of the purchase price (3% each from buyer and seller). This is not variable (as in the UK) but it can be worth trying to negotiate.

4. Solicitors/legal fees: ca 1% of purchase cost + €215.00 (£150.00) for a power of attorney to sign the title deeds on your behalf. In addition, the Turkish Notary, who must witness the deed signing process and the power of attorney, must be paid €90.00 (£60.00)

5. For UK buyers, the power of attorney must be certified by the UK Foreign and Commonwealth Office (FCO) and this currently costs £19.00 + £5.00 for return postage. You can go to the public counter in person for immediate validations. Visit the FCO link for more information

Tags: Turkish property law

Andorra, Argentina, Australia, Austria, Bahamas, Bangladesh, Barbados, Belgium, Belize, Benin, Bolivia, Bosnia-Herzegovina, Botswana, Brazil, Cameroon, Canada, Central African Republic, Chile, Colombia, Costa Rica, Cote D'Ivoire, Croatia, Cyprus (northern), Denmark, Dominican Republic, Ecuador, El Salvador, Estonia, Finland, France, Gabon, Germany, Ghana, Grenada, Guatemala, Guinea, Guyana, Haiti, Honduras, Hungary, Ireland, Israel, Italy, Jamaica, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malawi, Malaysia, Mali, Malta, Mauritius, Mexico, Monaco, Moritania, Mozambique, Netherlands, New Zealand, Nicaragua, Nigeria, Norway, Panama, Paraguay, Peru, Philippines, Poland, Portugal, San Marino, Senegal, Serbia and Montenegro, Singapore, Somalia, South Africa, South Korea, Spain, Sri Lanka, Swaziland, Sweden,Tanzania, United Kingdom , Uruguay, USA, Venezuela.

In addition, citizens of the following countries may buy properties but not land: Azerbaijan, Bahrain, Belarus, Chad, China, Egypt, Georgia, Iran, Jordan, Kazakhstan, Kenya, Kyrgyzstan, Macedonia, Moldova, Morocco, Namibia, Romania, Russian Federation, Slovenia, Tajikistan, Turkmenistan, Uganda, Ukraine, Uzbekistan.

*As far as we can ascertain See also: Turkish Property Law, Turkish Property Taxes

Tags: Turkey reciprocal property agreement

2. You cannot buy more than 25,000m² (6 acres) (with or without a property) of land in Turkey without special consent from the Turkish Government

3. There are restrictions on buying in certain locations for military, environmental and strategic and other reasons - determined by the authorities. Please note: we are looking into new information regarding purchases outside municipal areas and will post a piece shortly

4. Military checks will still take place on foreign purchases, although it is anticipated that the Turkish military will provideall Land Registry Offices with maps marking any restricted areas. This will effectively remove military checks on the land itself but it is unclear if the element of the check which relates to personal suitability will remain in place. We will report on this if we receive any further clarification.

5. You cannot own more than (5/1000) of any designated province

6. The local Land Registry Office regulates all property transactions in Turkey (see a photo of a Tapu (Title Deed) here)

7. A foreign citizen can inherit a Turkish property from another foreigner provided there is a reciprocal agreement on inheritance for Turkish citizens in their country.

8. In principle, although not yet in practice, a foreign citizen can have a mortgage on a Turkish property, in a foreign curreny although interesr rates may make this unattractive for now (expected finalisation of legislation in 2006)

9. You can take the proceeds of the sale of a Turkish property out of the country (see our article on Turkish property taxes - link below)

10. Failure to comply with the laws and regulations may mean having to sell the property and passing the proceeds to the Ministry of Finance

Our apologies for finishing on a negative, but as long as you follow procedure correctly, you won't have any problems. There is one thing to say about "Foreign Capital Companies". These are firms established by foreigners in Turkey using foreign capital and from our understanding, there are none of the restrictions mentioned on acquiring property. These companies appear to be exactly the kind we talked about in the post on property tax and so we recommend careful research to find out if this vehicle suits your situation.

Military Zoning - Army to Transfer Responsibility?

The good news is that from January, the military authorities (the Aegean Army in Izmir for the Muğla Region) were given three months to finalise the military zones (where foreigners can't buy) and pass this information to the Land Registry Offices. This should mean that the backlog from last July of frozen transactions can begin to be cleared - slowly! Thus far, it has proved almost impossible to obtain accurate local information on restricted areas. This information has often been guarded and so open to speculation but in the case of the Bodrum Peninsula, the restrictions invariably apply to areas which 'overlook' foreign territories (Greek Islands) as well as the usual restrictions in place near military bases and police stations.

The main thing to remember is that for the ordinary EU buyer ( we have posted a complete list of reciprocal countries ), you will not have any trouble buying your holiday/investment property. The British embassy has a list of English speaking lawyers on its site but it does clearly state that these are not recommended by them just listed.

Tags: Turkish property law, Turkish property

Tags: Turkish off-plan, Turkish property

PROPERTY TRANSFER TAXES

When you buy a Turkish property, it is subject to 1.5% (of the sale price) transfer tax. The buyer and the seller pay 1.5%. The same charge will be applicable when the property is sold and, in either case, is collected prior to the transfer of ownership at the Land Registry Office. If the property is new-build, a tax of 1.5% based on the value of the asset is due.

In addition, VAT will also be applicable on company-to-company or company-to-person sales.

New build residential properties with a useable area of less than 150 m² are subject to 1% VAT, rather than the standard 18%. Since most residential property is below this, it isn’t a problem but be careful if you are contemplating a large property.

Although not strictly a transfer tax, you should check to see if the contract of sale includes a monetary clause. If so, you may be liable to pay Stamp Duty of 0.75% of the value stated in the contract. This could be a significant amount so be warned!

ANNUAL TAX RATES AND FILING

Property tax returns are filed on a four-yearly cycle and annual taxes are paid in two equal installments. This year (2006) is a filing year in the four year cycle.

Annual tax rates (as a percentage of the property value) for different types of real estate are as follows:Land 0.3 % Buildings 0.2 % Residential buildings 0.1 % Fields 0.1 %

These rates are double in metropolitan areas so you need to check if your intended purchase is within a metropolitan boundary.

In general, all capital gains from the sale of property are subject to Income Tax but we will refer to this as a Capital Gains Tax as it is very similar to this concept (in UK taxation) and this is calculated using rates published by the Ministry of Finance. The net capital gain is calculated using a revaluation method which theoretically takes into account any increase in the value of your property and is inflation-adjusted.

As an individual, after you have owned a property in Turkey for four years, you will be exempt from any capital gains tax.

BUYING THROUGH A TURKISH COMPANY

BE VERY CAREFUL WITH THIS! We have come across several agents in the Bodrum area, and we know it happens elsewhere, who offer ‘off-the-shelf’ companies for you to use to buy your property. Some agents will simply not support this method, which sets the alarm bells ringing. We will deal with the tax implications here but it also impacts on where you can buy – more in another article . There is some doubt as to how the Turkish authorities view companies which only own your property. You do not want to be in a tricky tax position because the company does not actually trade. We are investigating this further and will post an article soon.

If you buy a house in Turkey through a company (i.e. you set up a Turkish company to buy the property), when you sell the any capital gain is exempt from corporation tax if you have owned it for at least two years. However, a 10% withholding tax is applicable to the capital gain. If you are a non-resident and you do not trade with your company (i.e. it is only a vehicle to buy the property), then you will need to file a tax return for the capital gains within 15 days from the date of sale.

TURKISH PROPERTY TAX PROBLEMS

Property taxes are based on the tax value of property, which is the sale price of the property. Properties are subject to a revaluation every year at a level declared by the government. Officially, the property value declared may not be less than the minimum amount determined for the area by the ‘special valuation commission’. However, there is a widespread disregard for this aspect of the system. The majority of people under-declare the sale price (in private sales) in order to avoid taxation and the local Land Registry Office (Tapu ve Kadastro Müdürlüğü) seem to be quite ‘flexible’ on this. Here is an example:

A 3 Bedroom, 2 bathroom semi-detached villa in Bodrum with a sea view.

Owner paid £50,000 two years ago Value today: £100,000 (yes, this is possible!) Sale price: £100,000 (you, the buyer, pay this amount) Price declared on the title deeds: £70,000 (both parties declare this to be accurate) Money ‘hidden’ from tax authorities by the seller: £30,000

Why do this?

Because the tax rates on any gain (mentioned above) are calculated as a percentage of the difference between the purchase price and the sale price, so in our example:

True difference between purchase price and sale price: £100,000 - £50,000 = £50,000 Amount which is legally taxable as a gain: £50,000 Declared difference between purchase price and sale price: £100,000 - £70,000 = £30,000 Amount which the tax authorities think is taxable as a gain: £30,000 Amount ‘hidden’ for tax purposes: £50,000 - £30,000 = £20,000!

You both save on the 1.5% sales & purchase tax, which instead of being 1.5% of £100,000 becomes 1.5% of £70,000 but this is only a saving of £450

IN REALITY, THIS IS TO THE SELLER’S ADVANTAGE, NOT YOURS. YOU ONLY SAVE ON THE 1.5% TRANSFER TAX, THE SELLER SAVES ON THE TRANSFER TAX AND THE CAPITAL GAIN.

The rate of taxation on the gain has varied significantly over the years (from 28.5% to 107.6% of the difference, we think this is correct) so you will need to check what it is currently if you are selling. If you are buying, be careful! Under-declaration is illegal and could potentially lead to a large fine. You may also have a problem with buildings insurance. Imagine a scenario where your house needs to be completely rebuilt after a fire/earthquake etc.. Your insurer in our example may only cover you for the declared value of your property (£70,000) but the cost of reconstruction may be more.

Finally, if you come to sell in a few years and you under-declared the sale price, there is every chance that because of the fast rising prices you will become liable for a much larger gain:

You ‘officially’ bought the Bodrum house for £70,000 in 2006 and you want to sell it in 2010(when there is no Capital Gains Tax) when it is worth £180,000. The authorities have become much more efficient and you are unable to under-declare.

You pay tax (at the prevailing 2010 rate) on £180,000 - £70,000 = £110,000.

Had you declared the true purchase price in 2006 of £100,000, you would only have paid tax on:

£180,000 - £100,000 = £80,000

RENTAL INCOME

Net rental income is taxable in Turkey at normal income tax rates. There is an exemption on the first ca €1360.00 (£940.00) per year.

If you are non-resident and only earn rental income that has been subject to withholding tax in Turkey, you do not need to file an annual tax return. If you do need to file a return, on your Turkish property, it will need to be submitted every January unless you have other income in which case the filing month is March. Please see our alert on rental incomes for more.

Property related costs such as maintenance, repairs, insurance and interest are tax deductible. Annual taxes are normally shared between the lessee and lessor (if you are interested in an investment property for long letting this is relevant).

Stamp Duty is levied on tenency contracts at a rate of 0.15%.

Rental income acquired by companies is included in annual corporate income tax return and is subject to 30% corporation tax. Additionally, a levy of 10% is imposed.

N.B ACCORDING TO THE UK TURKISH EMBASSY, CORPRATION TAX WILL BE REDUCED TO 20% IN THE NEAR FUTURE (mid-2006) SO CHECK OFFICIAL SOURCES IF THIS AFFECTS YOU.

RESIDENTIAL ENVIRONMENTAL SERVICES TAX (EST)

This tax is collected through your water bill but covers other services such as rubbish collection. If you own a residential property, the local water suppliers charge an EST of YTL (New Turkish Lira) 0.13 / m³ of metered water used, but you should check that your water comes from the mains supply or from an artesian well on your site (estate/compound) as this may be cheaper and will usually be paid to the site managers' office. Either way, this is not a huge amount to pay.

The rates for metropolitan areas are slightly higher at YTL 0.16 / m³ of metered water used by residential properties.

This tax are paid twice yearly at the belediye (council) office.

SUMMARY

We know that bad advice is worse than none at all so always to double check anything anyone tells you (including us). This goes equally for estate agents in Turkey as it does for professional advice in your home country. We have been amazed at the variation in responses to our enquiries and it has been a process of trial and error to reach a point where we feel confident in the Turkish property market. Sometimes people simply don’t know the answer, sometimes they are only interested in selling you a property or tax advice, but you can at least print this article and others from this property blog and start asking questions based on it!

Tags: Turkish tax, Turkish property

Tags: Turkish property forum, Turkish property

Tags: Turkish Property Consultant exchange, Turkish property news

Tags: Turkish flights, Turkish property

We know from experience about the purchasing process in Turkey - what to look out for and what can go wrong! We also think Turkey is a wonderful place for a second home, or to live. If you are sensible and follow some of our advice, you can look forward to a smooth purchase and then a great holiday home or a new life!

Please visit us again as new content will be added all the time and if you have found the information useful, we would really appreciate a small donation to help us with the upkeep and improvement of the site as it is all done on a voluntary basis at present. If you feel able, you can donate by clicking the PayPal logo. Thank you for reading our content.