Real Estate & Tax News in Turkey from Propertyshowrooms.com

New Turkish tax laws require research for investors

Tue, 12 Feb 2013 12:56:45 GMT

Investors considering Turkish property must research the implications of new tax laws, according to Colordarcy Investment. The changes affect new builds and mean that they will now fall within the standard 18 per cent tax band. Failing to account for the law when purchasing new-build or off-plan property in Turkey could lead to higher levies than expected. However, Colordary stresses that the tax changes aren't entirely bad news, with those already owning property in the country or purchasing key ready real estate benefiting from a possible uplift this year.

Nonetheless, the new law has ramifications for KDV tax, which previously stood at just one per cent on property with a closed living area of less than 150 square metres and 18 per cent for properties over this level. Now, 18 per cent will apply for most properties, even those units less than 150 square metres.

While this will only affect investors looking for property below a certain size in the immediate term, it may drive property values up further. Colordarcy believes that the price of smaller apartments could rise and put "upward pressure" on larger apartments. This means finding an off-plan bargain may be a troublesome undertaking. "It will depend on three things," Loxley McKenzie, managing director of Colordarcy, explained: "Are developers prepared to absorb the cost? The value of the land the property is built on and when they built it."

In the wider market, key-ready properties will no doubt become more attractive investment opportunities, with the law only applying to building plans submitted this year and beyond. Consequently, the pull of Turkish property is unlikely to diminish. However, demand is likely to sway towards larger real estate - a change from previous years. In 2011 the Global Property Guide reported that in Istanbul especially, smaller apartments were performing better than their more sizeable counterparts. In the popular district of Besiktas, yeilds for little apartments had improved. A 120 square metre apartment fetched a yield return of approximately 6.6 per cent, which larger properties unable to enjoy a similar rate.

Is tax deterring foreign buyers in Turkey?

Sat, 19 Jan 2013 07:00:02 GMT

Turkish property has seemingly gone from strength to strength lately - or as far as can be expected in a global financial crisis - but tax rules could be preventing the sector from reaching its full potential. Hürriyet Daily News reported that the complexity of the new real estate tax system is intimidating foreign buyers. This is in part to incoming VAT measures, which target small luxury homes (less than 150 square meters) licensed by the end of 2013, driving up the cost of such properties.

Under the changes, tax amounts will be determined by the Ministerial Council based on six variables: size in square metres, value of one square metre, luxury house status, license year, neighbourhood and status on city. Ömer Faruk Çelik, chief executive officer of Sinpa? REIT, told the newspaper: “Real estate demand was stuck at around 400,000 sales for several years, and the new tax will pull down the sales even lower.”

However, not all industry experts are concerned about falling overseas demand. In fact, Bilfer Budak Roche, head of Leggett Turkey, claims foreign buyers are driving the market and will continue to do so. He suggests that since the country gave access to buyers from countries in the Middle East and Russia, Turkish real estate has been the subject of much more activity. Research from the association of real estate investment companies (GYODER) has shown that in 2012, new home prices in the country grew by just over 12 per cent, continuing the trend for positive growth in the country.

This is in part thanks to the growing maturity of the market and increased stability in the country. Herman Kok, international research director at Aberdeen Asset Management, explained that whereas in the past Turkey suffered from a hyperinflationary economy and high volatility, since 2002 the government has managed to create a relative calm, lowering public sector debt.

Mr Roche concluded: "We fully expect to see demand from international buyers to continue growing in 2013. GYODER estimate that overseas investment in the Turkey property market is set to rise from the current $2.5 billion (£1.5 billion approximately) a year to around $10 billion (£6.1 billion) per annum."