Turkey introduces property tax changes

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Turkey has been enjoying a relatively buoyant property market, especially in terms of the commercial sector, but some analysts warn that new changes to taxation procedures could have negative effects on the residential side.

VAT rule changes were announced at the start of this year which replace a size-based rule that had previously been in force whereby homes under 150 square metres in size were taxed at a lower rate.

Properties over 150 square metres had a levy over 18% whilst those under the limit had the bonus of attracting VAT at only 1%.

It isn’t just this increase in tax costs that could have an impact on interest from potential buyers as other aspects of the system have also become more complicated.

Various fees can now fall under the influence of six different variables which not only include the size of the property but also the value per square metre, luxury status, the year of licensing, the neighbourhood location and status of the particular city.

Although some commentators have reacted badly to the changes and suggested that buyers, especially those from overseas, will be put off, other voices think they might bring positive results.

One immediate effect is a rush for completion of property sales before the licensing deadline and estate agents predict more existing supply coming to market due to resales of existing properties offering more attractions in terms of value for money for buyers.

Turkey has recently moved up the table of international countries, showing the highest domestic property price increases and now stands at fourth place, up from ninth.

The tax changes are a continuation of the revisions to Turkey’s property laws which allowed non EU investors to become owners for the first time last year.

According to the Environment and Urban Planning inventory nearly 112,300 foreigners have bought 90,000 properties in Turkey's top 10 cities as of December last year.

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