How easy is it to arrange banking in Turkey?
When you decide to purchase a property in Turkey, you will need to open a bank account to facilitate the purchase of the property. Opening a bank account is a straightforward process and there are numerous international banks with branches in Turkey.
A full list of these is available in our “Discover…….The Financial Issues Supplement”.
Most banks in Turkey have ATM’S, enabling you to draw foreign currency. Exchange offices are widely available in tourist areas although they can give poor rates. Credit and debit cards are widely accepted in Turkey. When you open a bank account in one of Turkey’s banks, you should compare the commission rates for transfers to and from the UK as these can vary significantly.
Most banks in Turkey have English-speaking employees in their foreign section.

What is the currency in Turkey?
The currency in Turkey is the New Turkish Lira or YTL (Yeni Turk Lirasi).
The YTL is divided into 100 Kurus.
Notes and coins of the following denominations are in circulation:
Coins – 1,5,10,25,50 Kurus and 1 YTL
Notes – 5,10,20,50 and 100 YTL
The Euro is widely accepted in Turkey and is frequently the favoured currency for local traders.

Will I be taxed on rental income from my property?
If you decide to rent out your new property, rental income over and above the government allowance of YTL 2,300 (approx. £800), is treated as a “gain” and subject to income tax. Any taxable gain would be taxed at between 15% & 35%, dependant on your overall level of income.
(See “Discover…….The Financial Issues supplement” for further detail regarding tax rates).

Do I pay Capital Gains Tax if I sell my property?
As a property owner in Turkey, provided you have owned your property for 5 years, you will not have to pay capital gains tax on any profit made if you decide to sell it.
(See the “Discover…The Financial Issues supplement” for further details regarding capital gains tax)
There is a double taxation agreement between Turkey and the UK. This means that any tax paid in Turkey will be allowed as a credit against any UK
tax assessed on the same income and/or chargeable gain. In other words you would only pay tax in Turkey and not in the UK.

Are there any Inheritance Tax issues in Turkey?
For a UK resident owning a property in Turkey there would not be any Inheritance Tax (IHT) issues in Turkey, unless the Turkish property was left to a Turkish National. In Turkey it is the beneficiary of the legacy who pays Turkish Inheritance Tax.
Once a property is registered in your name, it is advisable to update your UK will, referring to your new Turkish Home. Your UK will is legal in Turkey. 

What about local taxes?
As a property owner in Turkey, you will be liable for local taxes.
These are usually collected by the Municipalities (local government) and like council tax in the UK, are used to fund local services and amenities. The amounts involved are fairly modest and much lower than the UK.
(See the  “Discover…The Financial Issues supplement” for further details regarding these local taxes).

How can I raise a Mortgage?
The easiest and simplest way is to raise a mortgage against your own property in the UK. Provided you have sufficient equity in your UK property and can demonstrate your ability to service the additional borrowing, most mortgage providers are happy to make such a loan available.
New Turkish laws have recently been passed which mean that it is now possible to obtain a mortgage in Turkey of up to 65% Loan to Value (LTV).
We recommend that before embarking on our inspection trip you have your financial arrangements in place to improve your bargaining power and avoid disappointment.

What happens to my UK Pension if I live in Turkey?
UK pensions are not taxed in Turkey and you can freely transfer your pension to Turkey.
The cost of living in Turkey is considerably lower than in the UK and you can be assured that your money will go much further. Your pension will provide for a much higher standard of living in Turkey than it would in the UK.

What are the investment prospects for Turkish property?
It is widely regarded that now is the ideal time to invest in the Turkish property market. Turkey has started the process of joining the European Union which  traditionally makes a huge difference to any property market.
Property experts have dubbed Turkey the “New Spain” with property prices being likened to those in Spain 20 years ago. Since 1997, Spanish property prices have seen a growth of 300% (source: Financial Times), and the currently low property prices in Turkey look set to follow this model and appreciate rapidly over the coming years.
Turkey has a large and fast expanding tourist industry with the number of tourists set to reach 25 million by the end of 2007. Low cost airlines are continuing to expand their services to Turkish airports and new airports are being built (Gazipasa is opening early in 2009 to service Alanya on the Turkish Mediterranean coast), meaning that Turkey is becoming more and more accessible.
Strong economic performance and an ongoing commitment from the Turkish government to invest heavily in promoting Turkey as a tourist destination, have led to the World Travel and Tourism Council predicting that Turkey’s already healthy tourism market will double in the next decade. This will inevitably have a very positive impact not only on the capital appreciation of Turkish property but also on the rental potential.
With a population of c.72 million, of which around 70% are under the age of 30, the country has a strong local market for residential property, ensuring that investors do not have to rely solely on the international market for resales. Recent legislation means that mortgages are now available in Turkey for the first time, further improving the possibility of re-sales within the local property market.
With the south coast resorts along the “Turkish Riviera” being one of the main areas for major foreign investment, many investment experts are predicting capital appreciation in property values of 30 – 40% over the next 2 years. Accordingly, there is no better time to be considering purchasing a Turkish property, offering you a wonderful investment opportunity.
With the growing number of visitors, the buy-to-let market is also looking hugely promising for investors keen to profit from the potential rental returns. As rental prospects vary from area to area, care should be taken in selecting property in the best possible location for an investment property with rental income potential.

 

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