The 5 types of real estate taxes in Turkey

The Turkish economy is based on real estate investments in the first place, and since real estate varies in terms of area, value and type of investment, the taxes imposed by the Turkish state on real estate vary according to the type of property and the method of its investment, and taxes are paid as fees to the tax department, in case of a procedure. Selling, buying or inheriting a property.

What are the types of taxes on real estate in Turkey?

There are five types of taxes imposed on real estate ownership and investment in Turkey, and they are:

1- Income tax on real estate:

The tax includes all types of income that an individual receives on his property, and the income tax rate increases with the increase in income, and in general, its rates range from 15% to 35%.

The investor on Turkish territory or whoever runs a commercial activity in it is required to pay income tax on all profits and returns gained from the investment, but in the case of buying and renting a house, the income tax is on the amount that the house rent returns to its owner.

How much should be paid according to income?

The income tax rate ranges between (15% -35%) and is determined according to income groups:

If the per capita income is between 0-10000 Turkish liras, then the tax rate is 15%

If it is between 10001-25000 Turkish liras, the tax rate is 20%.

And in the event that it is between 25001-58000 Turkish liras, the tax rate is 27%

If the income is above 58,000 Turkish liras, the tax rate is 35%.

Certain fees such as maintenance, insurance and property management are subject to a deduction from the taxable amount.

2- Tax on wealth:

Real estate owners in Turkey must pay an annual tax on all their real estate, including buildings and lands, the tax rate ranges between 0.6% -0.1%, and its percentage is determined after knowing the value of the property.

In the case of buying and selling a property, both the seller and the buyer must pay a one-time tax at the time of the purchase only, equivalent to 2.2% of the property’s value.

3- Capital gains tax:

Capital gains tax must be paid by real estate owners in the event of a sale within less than five years from the date of purchase proven in the contract, for the profit achieved by the sale, and it is calculated by subtracting the property’s purchase value from the sale value documented in the contract.

How much percentage should be paid according to the profit from selling the property?

If the profit from the sale of the property is less than 6000 Turkish Liras, it is not subject to tax.

In the event that it is from 6000-7000 Turkish liras, the tax is due in the amount of 15% of the profit.

And if the profit is between 7000-18000 Turkish liras, then it is subject to tax at a rate of 25%.

And if it is from 18,000 to 40,000 Turkish liras, then the tax rate is equivalent to 27%.

As for the profit that exceeds 40,000 Turkish liras, he must pay 35% tax.

Are there cases exempt from capital gains tax?

There are two special cases that exempt real estate from capital gains tax:

  • The first case is the purchase of a property through a commercial project, or a company that manages it in Turkey, so the property is not subject to capital gains tax and the taxes that are part of the business investment in Turkey that are paid accordingly.
  • The second case, if the owner keeps the property for a period of more than five years, then he does not have to pay capital gains tax upon sale, which will secure the largest possible return from real estate investment in Turkey.

4- Real estate inheritance tax:

According to Turkish law, movable property is subject to the law of the country of the deceased, while immovable property is subject to Turkish law and the legal inheritors of the deceased’s real estate are determined according to the law unless he leaves any documented will, if the deceased has assets in Turkey, a tax on the inheritance must be paid that can be paid Over a period of three years in the months of May and November of each year, and it varies according to the value of the property:

Values ​​up to $ 58,000 are subject to 1%

Values ​​up to $ 186,000 are subject to 3%

Values ​​up to $ 466,830 are subject to 5%

Values ​​up to $ 1,013,000 are subject to 7%

5- Value added tax:

It includes the added expenses that must be paid on exports and imports in the event of establishing a company in Turkey and the desire to import foreign goods.

What is the value-added tax rate imposed on real estate?

The ratio depends on the type and area of ​​the property, and we distinguish three types:

  • Residential real estate whose area is less than 150 square meters 1%
  • Residential real estate with an area of ​​more than 150 square meters 8%
  • 18% of commercial and residential dual-use properties

What are the advantages offered by the Turkish government to investors?

And as it constitutes a burden on side investors, the Turkish government has provided a concession to foreigners investing in real estate in Turkey to be exempt from value-added tax, which increased the desire to invest in Turkey.

What are the categories of foreigners eligible for VAT exemption?

  • Foreigners not residing on Turkish territory.
  • Companies and organizations that do not achieve profits, do not have offices or commercial operations in Turkey.
  • Turks residing outside Turkey for more than six months, in the event that they possess a work and residence permit.

What documents does a Turkish citizen who resides outside Turkey need to apply for exemption?

  • A work permit, or any documents that replace it, from the official embassies and consulates of Turkey in the country of residence.
  • A document proving that the Turkish citizen has resided outside Turkey for a period of at least six months before purchasing the property.

What documents does a foreign investor need to apply for exemption?

  • A copy of the current valid passport.
  • A document stating that the buyer is not residing in Turkey, issued by the Turkish tax office, which requires submitting the following documents to the tax office:
  1. Notarized translation of the passport.
  2. Notarized proof of the foreign address outside Turkey.
  3. Passport processing from the Turkish Police Department.
  4. A letter from the General Directorate of Immigration stating that the applicant is not residing in Turkey.

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