Property taxes in Turkey
Many people who want to buy real estate in Turkey are asking a lot of questions about the taxes on the property. To whom and when to pay? .. Of course, it may be difficult to access the information accurately, either because it is not available in English or is not sufficiently clarified. The following is a simplified explanation of the taxes on property in Turkey from the date of purchase until the transfer of ownership.
♦ Taxes when buying the property in Turkey:
1- Title deed fees 'Tapu Harcı':
Paid one time when the ownership of the property is transferred to the new owner at Real Estate Registry Department, its amounts is 4% of the declared value of the property and falls to the seller and the buyer equally (2% to the seller and 2% to the buyer).
2- Value added tax 'KDV':
Is a tax imposed on different rates for all products in Turkey, the rate of VAT varies according to the product and ranges from 3 segments 1%, 8% and 18%.
With regard to value added tax on real estate is imposed according to the price per square meter of the property and is worth when the sale of the property, although the real estate with a net area of less than 150 square meters, the tax is applied at the minimum of 1%.
In order to attract foreign investments, the Turkish government abolished the value added tax on the sale of real estate to foreigners and Turkish citizens residing abroad for more than 6 months, according to certain conditions that must be achieved to benefit from the exemption, (the property must be new and be purchased from a construction company, and a pledge not to sell for one year from the date of purchase, and that the price of the property shall be transferred from abroad in foreign currency).
♦ Taxes during owning the property in Turkey:
1- Immovable property tax 'Emlak vergisi':
Is an annual tax imposed on all types of real estate (housing, shop, agricultural land, etc.). This tax is paid to the municipality to which the property belongs.
This tax is payable in two installments during the year (for the current year). The first payment should be made within 3 months from 1 March to 31 May. The second payment must be made within one month from 1 to 30 November of each year.
It should be noted that payments are not delayed for specified periods to avoid the accumulation of fines. Financial penalties are added to the amount of the tax by 1.4% per month in case of delay in payment during the previous periods of each year.
The value of the property tax varies according to the type and location of the property and is calculated as follows:
|Property Type||inside metropolitan municipalities||outside metropolitan municipalities|
|housing||0.2 % of the value of the property||0.1 % of the value of the property|
|workplace||0.4 % of the value of the property||0.2 % of the value of the property|
|building land||0.6 % of the value of the property||0.3 % of the value of the property|
|land||0.2 % of the value of the property||0.1 % of the value of the property|
It is noteworthy that there are some categories of taxpayers are exempt from property tax, such as families of martyrs, war victims and people with special needs, within the conditions regulated by law.
2- Environment tax 'Çevre Temizlik Vergisi':
- This tax shall be imposed on the built-up and inhabited properties (Houses, workplace ..), While the unbuilt land of all kinds and vacant real estate shall be exempted.
- The Occupant of property is the one Who is charged with paying this tax, whether it is the landlord or the lessee.
- Calculated based on the amount of water consumption in residential units as follows:
• Housing in the metropolitan municipalities (cities): 39 piasters per cubic meter consumption.
• Housing in other municipalities (outside cities) 29 piasters per cubic meter consumption .. (the amount of consumption is mentioned in the water bills).
- For workplace (shops, offices ...), a lump sum determined by the Ministry of Environment shall be paid according to the category of property and its location outside or inside the cities. To view these categories you can click on the link: https://www.verginet.net/dtt/1/Cevre_Temizlik_Vergisi_Tutarlari.aspx
- This tax is paid to the municipality to which the property belongs in two installments, during the months of March and November of each year.
3- Rental return tax ' Kira gelir vergisi':
Imposed on the owners of the leased properties, ie those who earn income from renting their properties. Are calculated according to the annual income tax rates mentioned in the previous table, after determining the amount of taxable net income and lowering the minimum income tax exemption of 4,400 Turkish lira for 2018 and 5400 Turkish lira for 2019. This tax shall be paid ta the Tax Department for the income of the current year in two installments during the months of March and July of the following year.
Note : this tax is only for those who rent their property for others , in case you dont rent it to any one , there will be no rent tax.
♦ Taxes when selling the property in Turkey:
1- Value increment tax 'Değer artış kazancı vergisi':
Or it can be called real estate profits tax. Article 80 of the Turkish Income Tax Law regulates how this tax shall be deducted and its amount, This article states that: "If the ownership of the property is transferred from the owner's hand within a period of 5 years from the date of purchase, it is subject to the Value increment tax".
The same article excludes properties that are transferred from the owner's hands without the sale. It states: "If the ownership of the property is transferred without a paid allowance (inheritance, gift, etc.), it is not a subject to the Value increment tax". To simplify this tax we will explain it in the following points:
A) This tax shall be imposed on the value difference between the date of purchase of the property and the date of its sale, for example, a property purchased on 1/1/2016 in the amount of 200,000 Turkish lira, and sold on 1/1/2019 at 350,000 Turkish lira. Thus the amount of 150,000 Turkish lira is the amount of the increase in value, which will be subject to a calculation to determine the amount of tax.
B) If the property is sold after 5 years or more from the date of purchase (the date of purchase is the date of registration with the Tabu Department), it shall be exempt from this tax.
C) Real estate that is transferred without a Paid allowance such as inheritance and gift is also exempted from this tax.
D) The calculation of the amount of this tax goes through a somewhat complex process, where the real purchase price (the property purchase price in the currency value at the date of sale) should be determined to determine the real profit amount, in light of the inflation rate.
in addition to deducting some expenses and fees from the real profit amount, The amount of the tax exemption determined by the Income Department is also raised each year. At the end of this process we get the amount of taxable amount.
E) After determining the taxable value, the tax shall be deducted according to the annual income tax tranches, as follows:
|The amount to be taxed||Deduction rate|
|Less than 18,000 TL||15 %|
|From 18,000 TL to 40,000 TL||20 %|
|From 40,000 TL to 98,000 TL||27 %|
|more than 98,000 TL||35 %|
F) The tax return for properties sold in a year (2018 for example) will be presented during the period from 1 to 25 March of the next year (2019). The tax should be paid at the Tax Department 'vergi dairesi' in two installments during the months of March and July of 2019.
2 - Inheritance and transfer tax 'Veraset ve İntikal Vergisi':
The inheritance tax includes all the deceased's money, but we will talk here about the real estate part of the inheritance.
This tax shall be imposed on immovable property situated within the territory of the Republic of Turkey and which is transferred by inheritance or without paid allowance such as gifts, prizes and donations.
The taxpayers are the heirs of the deceased. They must extract a Devolution of estate of the deceased and obtain tax id number for each of them. The tax declaration shall be submitted to the tax department within four months of the date of death (in case of death in Turkey, and the taxpayer is resident in Turkey), and within six months of the date of death (In the case of death outside Turkey or that the taxpayer was resident outside Turkey).
After Inventory of the estate of the deceased and determining the amount of the tax deduction, the tax shall be deducted according to the following rates:
|The tax base||Rate of inheritance tax||Rate of gift tax|
|The first 290,000 TL||1 %||10 %|
|The next 700,000 TL||3 %||15 %|
|The next 1,500,000 TL||5 %||20 %|
|The next 2,700,000 TL||7 %||25 %|
|Exceeding the amount of 5.190.000 TL||10 %||30 %|
The inheritance tax must be paid within a maximum period of 3 years from the due date. The amount of the tax can be paid in six equal installments payable in May and November of each of these three years.
- Note: the foreigner who owns a property in Turkey is treated as a Turkish citizen without imposing any additional fees or taxes. On the contrary, the foreigner may benefit from some facilities, in the desire of the government to encourage investment.
It remains to be mentioned that all information contained in the article is in force until the date of publication, and will be updated in the event of any amendments.
In case you have any other questions about property taxes in turkey , you may contact us.
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