Calis Beach and Fethiye Turkey Discussion Forum
Property For Sale in Calis Beach & Turkey => Moving To Turkey => Topic started by: Ian_and_Sian on May 01, 2019, 18:11:05 PM
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...we're joining the ex-pat throngs and taking the holiday out of 'holiday home'!
After five years of owning our apartment on the Lapis complex, we're finally doing what we've talked about for years - semi-retirement in Turkey - well for Sian, at least, being an actress, writer and film produce does mean she can carry on working to a certain degree providing the internet link stays up!
We anticipate making the move in September 2020, bringing the proceeds of our house sale with us to live on with the help of the generous Turkish interest rates.
So, please expect lots of questions this coming year from us and I hope you think some of them are not too daft.
To kick off, the questions, what is the tax on interest for a timed deposit account? I have read it's 20% but also have read that this was reduced last year but can't tell if that was a temporary reduction.
I estimate bringing over about £100K, converting it into Lira and putting it in a 32 day account (31 to 32 days seems to be the cut off for an extra percentage point interest, at least with Akbank). From what I can see, even with a 20% tax rate, the interest should be more than enough to live on?
We'll not be cutting UK ties completely, part of what we are planning is to buy a holiday home (static caravan style) on a holiday park not too far from us now. It will give us a bolthole to return to when back in the UK as well as giving another income through rentals while we're over there. Anyone experienced in that sort of set up?
We've not got too involved with conversations in this forum, just chipping in here and there but, we do regularly read the things going on and the advice people have to share
So, looking forward to joining the ex-pat community and becoming a lot more frequent poster on the forum...
... and hopefully meeting some of you when we're next there in September!
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Wishing you every happiness in your new life when it happens. :)
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All the best guys, follow your dreams :)
Plenty of CBF members have moved out (we are back in the UK 9 years now) so plenty of experience on here. Please ask away.
I'll leave the savings/interest question for others, what with us being out of it for 9 years my knowledge is dated :)
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At the mom the tax rate on interest is 15%
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We are also planning moving over in 2020 ( 55 in may so can get to my pension )
Not sure what to do with the house here in the UK. Sell it, rent it, or sell and buy a small terraced house to rent. Your Idea of a static home is interesting.
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One thing you will need to bear in mind when living off the interest from a tidy lump sum. With the ever weakening lira your base sum (in sterling) will be diminishing, and over time if previous trends are followed, quite alarmingly.
If you'd deposited £100k into lira at a Turkish bank ten years ago exactly, it would be worth around £30.5k in sterling terms today if you converted back.
Of course there are other factors to consider - inflation being rife, the sum total of your interest payments on your investment (at healthy percentage rates) which all makes for a mathematical calculation well beyond me. However, the general feeling is that you will be significantly worse off in money terms.
Some expats dismiss the value of their banked TL against the pound as they live, think and spend only in lira these days. That might be the case, as long as they never have to convert and return to the UK, or (God forbid) bequeath it to UK based relatives/friends who will want to convert it back to sterling.
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Been looking at the pound value against the Lira interest rate
100k at 2.2 lira to the £ 10 years ago, converted back at 7.8 lira to the £ now I make it 28K ( no interest added ) the value of the lira against pound value of the 100k has dropped 15% year on year to show that loss
Therefore if the interest rates are worth more than 15% net it could be worth putting cash into the lira but the gain will only be the difference if above 15%
so if you get 20% interest rates on a lira account you will get 17% after tax on the interest so the net gain would be 2% better
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Not a bad start at the mega sum :)
Ok so there are plenty of issues with that sum so, first spanner in the works - you didn't include inflation (currently 19.71% pa at End March 2019).
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Just worked from XE rates 2.2 ten years ago to 7.8 today which averages on a 15% increase annually over the 10 years. obviously some years are better some are worse
This last year was terrible for the lira 5.6 to 7.8 lira to the pound, an increase of 39% surprised inflation is as low as 19%
If you had put your 100K into lira a year ago and took it out today it would only be worth 72K ( again no interest accounted for ) if you accounted for getting a nett 17% interest by having it in a turkish account yielding 20% interest you would still only have 84K back in sterling 16K down the drain.
I would keep my cash mostly in my UK account, the Marcus account isn't bad for large sums of cash without tying it up although that only gives 1.5% interest.
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Good luck to you both, sure you will be very happy living in beautiful Calis, we are also moving over there in the very near future, we have owned a villa for 7 years, sold it and bought a bigger better one with a huge garden with every fruit tree in !! just returned after 5 weeks out there... roll on June when we go back, we will look out for you. xx
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I wish you all the best for your future plans and i hope it all works out
the big question is that if you convert your money straight away and your there for a year or so and you realise that its not for you you will of lost a lot of money
me personally when i have thought about it i always think that I would rent my property in the UK for the first year and if then I am still happy then sell but i am not one for rushing in and most likely be still thinking about it when its to late :D
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I defo would not convert such a large lump sum into lira ( that is just me personally) Iv seen soo many people lose a lot of money when they have had to convert back to sterling.
The one thing that I could not stand if I was living full time in Turkey are the winters, we were here in January and Iv never been so cold and wet in fact we cut it short at our home in Calis and went to Antalya earlier then planned which was not much better weather wise but at least the hotels had heating and lashings of hot water!
Good luck with whatever you decide to do re your finances here!
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Wishing you all the very best with your move here.
I'm rubbish at finances so can't help you with your initial questions.
We've been here just over 5 years now but still have a property back in the UK that we are thinking about - sell, rent? Sell and buy a smaller property? Got to say, I'm quite nervous about the idea of not having a base back in the UK. If, in the future, for whatever reason, we have to move back, I'm not sure we would be able to afford the kind of property we'd want to live in permanently, bearing in mind the spiralling British property prices.
However, we have no regrets about our move here. Every day presents a new little adventure and life lesson.
Yes, the winters here can be difficult to bear as on the whole building construction is more geared towards staying cool than staying warm. However, luckily for us, the previous owners of our house had had the foresight to install central heating pipework and so after 2 winters here, we bit the bullet and had the radiators and system installed. We also updated the immersion heater in the water tank to ensure a steady flow of hot water. Very wise decision. As a consequence, we love the winters here - bright, sunny, crisp days that afford you clear far reaching views. Much reduced traffic, empty beaches, milky turquoise seas, snow covered mountains and lush plant growth all around. (There's also lots of rain and storms but they are also pretty spectacular).
Oh and there's no such thing as a stupid/daft question - if you don't know, you don't know, so ask away ;)
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Thanks so far for all your replies.
I'm certainly aware of the issue regarding the exchange rate, I'll certainly be keeping a close eye in it! Though, I'm also thinking that should the Lira start to recover (it was about 4.5 to the pound when we first bought) then instead of losing, we'll make a tidy packet. (I've obviously spent WAY too much time on money market trader floors in investment banks!!)
Our initial plans are to live in Calis, living off around 30% of the interest, while continually reinvesting remaining interest to a point where we can then buy a villa, probably in Uzumlu. We calculated that this would take around three years to acheive but does involve moving the entire £100K into a Lira timed account. With the advice received from you all, I think I'll recalculate what we could do by moving £50K to the Lira account and keeping £50 either in a Sterling, Euro or Dollar account instead so, Excel sheets at the ready!!
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it looks like you no what your talking about and have it all planned out so once again good luck and keep us all informed I will be watching as it could be me one day inshallah
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Next question as I can find this anywhere online.
I now know that the tax rate on the Lira time deposit account is 15% (thanks Liz 101) but does the same tax rate apply to a foreign currency account (£, $, or Euro)
TIA