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.



Who's Online in Finance

We have 6 guests online