Tuesday, May 5, 2015

Property Taxes and Retirement Funds

In my country property taxes are not as high as they are in the US. Although I do not understand why we have to pay taxes on our residences; since it is the law, I pay them. In my opinion, one residence should be exempt from taxes. Actually retired people who own just one home are exempt from taxes but, property is a popular investment item.

Normally I pay the property taxes in two installments as allowed but, this time I just caved in and paid taxes in full for my residence, my rental property and mom's residence. Thank God, the property taxes for the other apartment I bought from my uncle early January, starts next year.

You may be wondering how much I paid for three apartments.... I paid just about USD 450.- for all.

My residence has the highest taxes, about half of the above number goes to my small two bedroom apartment since, Istanbul is more expensive than Ankara and my neighborhood is considered nice. Mom's home is a larger apartment which is also in a good neighborhood but, Ankara is cheaper.

I also decided to pay extra towards my retirement fund since it will be matched by 25% by the Government. This way, I made the maximum contribution that will be matched by the Government. Early June, there will be elections in Turkey and I am afraid Government will stop making this contribution or at least lower it to a smaller percentage.

Up until 2003, there was only Social Security in this country and now there is a supplemental system similar to 401Ks and/or Roth IRAs. I think ours is a hybrid of both. It is called a Personal Retirement System. I was skeptical at first but decided to join it in 2004.

Since the funds and the companies who were offering this were new, I was lost for quiet a while and did not earn much on what I contributed. The first 3-4 years were lost years. After I started reading about the retirement funds in the USA, I understood the logic and strategy and started making meaningful contributions and selecting better funds. It will hopefully be a nice chunk of money in 2023. You can either cash all of it or get paid over a period of time until the funds are depleted. With today's rules, it seems to be a wiser choice to cash it but, who knows how it will be regulated in 2023?

So, today I paid my taxes and made a good contribution to my retirement fund. I do not have to think about these things until January 2016. Happy!

3 comments:

  1. I live in the states and the property taxes I pay for my house go towards local police, firefighters, schools, etc. basically all the stuff you may or may not ever need to use but pay to have.

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    1. Even schools? That's interesting. In this country there are public schools and private schools and all are guided by the Ministry of National Education i.e. the part of Government. Police Force is run by the Ministry of Interior again, a part of the Government. Some of our property taxes go towards the municipality for trash collection, parks and such. I have to say things are not well run over here lately :(

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  2. same in Canada as the US. Our property taxes will be around $4,500 CDN a year on this house when we get assessed. Our property tax prices are not overly high either!

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