When budgeting for a purchase in Turkey, many people are not quite sure what the closing costs would amount to. It can vary depending on where you are buying and whom you are buying from. Its prudent to budget 7-8% to cover your closing costs, including registration of utilities. Don’t forget to also account for furniture!
Closing costs can be summarised as follows, but don’t apply in every single purchase:
Property tax
Property tax is 4% of the declared amount. In Turkey, there is the purchase price, and the declared amount. The declared amount is a figure which the local authority dictate, and this is generally 60-70% of the purchase price. The formal term is “Rayaç bedeli”. When buying from a developer i.e. brand new, the two amounts will be the same. Property Tax is shared between buying and seller, however strictly speaking, it is the buyer’s responsibility.
Agent fees
If you are buying second hand, most brokers will charge a 3% fee. Pera Property charges a 3% fee in the case of resale apartments and villas. Buying from a developer does not involve any agent fees, as the developer usually pay a commission to the broker.
VAT
VAT now applies on brand new property in Turkey, but is usually built into the price you pay, hence goes unnoticed. VAT on property less than 150 sqm is currently 1%, and anything over is charged at 20%. As this is included in your price, you will not notice it as an additional cost. International buyers without residency in Turkey are exempt from paying the larger 18% VAT.
Legal fees
Again, if you are buying a resale property, you will need to instruct a solicitor to ensure full checks are carried out. This can cost in the region of $1,500.
Notary costs
Some developers will need you to have your purchase contract notarised, and the current cost of this is 0.948% of the contracted purchase price. This is called a stamp duty and at the moment all government back projects are required to have notarised contracts.
Utility registration costs
You will need to register for utilities – Gas, electric, and water. This registration costs in the region of 2,000 Turkish Lira.
Insurance
It is compulsory to have a minimal insurance on your home in Turkey. This can take up three forms:
- DASK – this is a natural disaster pool, and costs around 300-400 TL per year.
- Buildings insurance – this covers a whole host of unforeseen circumstances and costs from 500TL onwards, depending on the value of the property.
