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
After successfully registering the property under your name at the municipality, an annual property tax is required. This tax is computed based on the declared value of the asset, which must not fall below the threshold determined by tax authorities.
The property tax is paid in two equal installments, scheduled for March-to-May and November each year, directly to the local government (municipality). Annually, the tax base undergoes an update through a coefficient determined by the Ministry of Finance, adjusted to the inflation rate.
The seller assumes responsibility for the property’s real estate tax in the acquisition year, while subsequent years’ taxes are the responsibility of the buyer, the new owner.
For additional details and payment options, it is recommended to reach out to your local council (Municipality). The tax calculation is based on the property’s value and is subject to thresholds established 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 distinction between foreign nationals and Turkish citizens regarding taxes or fees, with tax rates subject to periodic updates. Real estate ownership offers individuals the opportunity to gain income through two means.
Firstly, by renting out the property and earning rental income, individuals are obligated to pay personal income tax. In such cases, if the property is rented to an individual or a company, a tax return must be submitted to the nearest tax office for the previous calendar year, within the period from March 1 to March 25. Tax payments are made in two equal installments, with the first in March and the second in July.
Secondly, the market value of the asset may be appreciated, allowing individuals to realize a capital gain. If a property is sold within five years of the acquisition date, a capital gains tax is applicable based on the difference between the selling price and the inflation-adjusted acquisition price. No capital gains tax is imposed on sales by individuals occurring after 5 years following the purchase.
Inheritance and Succession Tax:
Turkish citizens and foreign individuals inheriting property in Turkey are liable to pay inheritance and transfer taxes. A taxpayer, in this context, refers to someone acquiring property through inheritance or receiving the property as a gift without charge.
Inheritance and gift taxes are computed based on the return submitted by the taxpayer.
For inheritance situations, the declaration must be submitted within four months from the date of death. In cases where the taxpayer is outside Turkey at the time of death, the return period is extended to six months. If the declaration is not related to a death and the taxpayer is absent from Turkey, the submission timeframe remains at four months. However, in instances where the death occurs in a foreign country and the taxpayer is in another country, the declaration period extends to eight months.
For property transfers made as gifts without charge, the declaration must be submitted within one month from the date of acquiring the property.
The tax base undergoes an annual update, with certain discounts applicable for inheritances to daughters, sons, and spouses.
It’s important to note that the transfer of property ownership to an heir is subject to inheritance tax. Consequently, if the heir decides to sell the inherited property, they are not liable for any personal income tax based on capital gains.
A Turkey-based company is required to pay corporate tax calculated based on its business transactions.
Corporations with legal or business centers within Turkey are considered residents, and they are subject to taxation on their income generated in Turkey. In cases where both the legal and business centers are situated outside Turkey, these corporations are classified as non-residents and are only liable for taxation on income derived within Turkey.
Corporate Tax Rate: In Turkey, the corporate tax rate applied to business profits is 20%. However, for the tax periods of 2018, 2019, and 2020, the corporate tax rate increased to 22%. However, the President has the authority to reduce the 22% rate back to 20%.
In Turkey, the provision of goods and services, as well as the importation of such, is subject to value-added tax (VAT).
VAT liability is triggered when an individual or entity engages in commercial, industrial, agricultural, or independent professional activities within Turkey.
VAT rates range from 1% to 18%, with the standard rate set at 18%.
For the commercial sale of residential properties with a net area of up to 150 m2, a VAT rate of 1% is applicable. Conversely, sales of commercial properties exceeding 150 m2 are subject to a VAT rate of 18%.