Basic property-related taxes
Concerning real estate in Turkey, the following taxes and insurance are compulsory:
- Real Estate Acquisition and Purchase Tax (at the time of purchase or sale)
- Earthquake insurance (a nationwide contribution rate is applied)
- Property tax
- Personal income tax (based on rental income and capital gains)
- Inheritance and Succession tax
- VAT (if a commercial delivery takes place)
- Corporate tax (for company business transactions)
More information about the Turkish Revenue Administration of taxation can be found in the booklet prepared by the Presidency of Turkey.
Real Estate Sale and Acquisition Levy
Each buyer and seller has to pay a real estate sale-and-acquisition levy of 2% based on the declared value of the asset (This value cannot be less than the threshold determined by authorities). It has to be paid before the transfer of ownership at the TAPU office.
Property has to be insured by the owner against earthquake risks. It is compulsory, and a national uniform tariff is applied. Other property insurance types are available, and they cover risks, including theft, fire, etc. For further information, please visit our insurance page.
Real Estate Tax Consultancy
Once we have registered the property under your name at the municipality, a yearly property tax must be paid. The tax is calculated based on the asset’s declared value, which cannot be less than the threshold determined by tax authorities.
Tax payments are made in two equal instalments in March-to-May and November each year to the local governments (municipality). The tax base is updated annually by a coefficient determined by the Ministry of Finance, adjusted to the inflation rate.
The seller pays the property’s real estate tax in the year of acquisition, whereas the consecutive years’ taxes are paid by the buyer (new owner).
You should contact your local council (Municipality) for more information and payment options. The tax is calculated based on the value of the property and is subject to thresholds set by the tax authorities as follows:
For real estate located outside of a metropolitan municipality:
Residences, Apartments 0.1%
Commercial Buildings 0.2%
Plots (Construction Purpose) 0.3%
Agricultural Land 0.1%
For real estate located inside of a metropolitan municipality:
Residences, Apartments 0.2%
Commercial Buildings 0.4%
Plots (Construction Purpose) 0.6%
Personal Income and Capital Gains tax Consultancy:
What earnings are gained through property investment? Are those gains taxable?
There is no difference between foreign nationals and Turkish citizens in terms of taxes or fees. Tax rates are updated periodically. A real estate property may enable an individual to obtain two types of gains.
Firstly, you can rent it out and earn rental income. In that case, you need to pay a personal income tax. If you rent your property to a person or company, you must submit a tax return to the nearest tax office for your rental income for the previous calendar year from 1 to 25 March. Taxes are paid in two equal instalments, the first in March and the second in July.
Secondly, the market value of your asset may rise, and hence you can attain a capital gain. If you sell your property within five years following the acquisition date, you will be subject to a capital gains tax based on the difference between the selling price and the inflation- adjusted acquisition price. No capital gains tax applies for sales by individuals after 5-years following the purchase.
Inheritance and Succession Tax:
Turkish citizens and foreigners who inherit property held in Turkey must pay inheritance and transfer taxes. A taxpayer is a person who acquires property through inheritance or is gifted the property free of charge.
Inheritance and gift taxes are calculated on the return submitted by the taxpayer.
In the case of inheritance, you must submit the declaration within four months from the date of death. When a death occurs and the taxpayer is outside Turkey, the return period extends to six months. Declaration time, not pertaining to death, will still be four months if the taxpayer is not in Turkey. However, the declaration period is extended to eight months when the death occurs in a foreign country and the tax payer is in another country.
For transfers made free of charge as a gift, the declaration must be submitted within one month from the date of acquisition of the property.
The tax base is updated annually—some discounts for an inheritance to daughters, sons, and spouses are applied.
Please note that the transfer of property ownership to an heir is subject to inheritance tax. Thus, if the heir sells his inherited property, he is not subject to any personal income tax based on capital gains.
A company based in Turkey must pay corporate tax calculated on its business transactions.
Corporations with legal or business centres in Turkey are qualified as residents, and taxation on their income in Turkey applies. Suppose both the legal and business centres are not located in Turkey. In that case, these corporations are qualified as non-residents and subjected to taxation only on their income derived in Turkey.
Corporate Tax Rate: In Turkey, the corporate tax rate levied on business profits is 20%. The corporate tax rate has increased to 22% for the tax periods 2018, 2019, and 2020. However, the President is authorized to reduce the 22% rate to 20%).
In Turkey, deliveries of goods and services are subject to Value-Added Tax (VAT). The importation of such goods and services is also subject to VAT tax.
Liability for VAT arises when: A person or entity performs commercial, industrial, agricultural, or independent professional activities within Turkey.
VAT tax rates vary from 1% to 18%. The general rate is 18%.
The commercial sale of residential property with a net area of up to 150 m2 is subject to a VAT of 1%. Comparatively, commercial property sales with more than 150 m2 are subject to a VAT of 18%.