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Real Estate Taxes in Turkey 2022

14/01/2022 Tax & Legal 3950 Real Estate Taxes in Turkey 2022

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After the rise in the intensity of real estate sales in Turkey lately, according to data stated by the General Directorate of Land Registry and Cadastre, which announced an increase in real estate sales by 29% compared to 2019, it has become necessary to identify the additional charges of purchasing a property in Turkey. This especially comes after exempting foreign buyers from the added value tax when owning a property in Turkey. This added value tax was imposed at 8% in 2013, and later on, it was canceled in 2017. This law, nevertheless, also applies to Turks who reside outside the country for more than six months. Hereinafter, we list the most important taxes that must be paid when buying a property in Turkey.

First: Real estate taxes when buying a property in Turkey for both foreigners and Turk nationals:

1- Property transfer fees (Tapu Harcı):

In Turkey, it is called the Tapu fee (when the property is ready and the payment is cash). It is a compulsory fee and equivalent to about 4% of the declared and specified value of the property in the title deed (Tabu.) It is usually paid evenly by both the dealer and the purchaser. Yet, sometimes one of the two parties pays it according to the agreement between them; For example, if the value of the property is $100 thousand dollars, the buyer and seller can each pay a $2,000 property transfer fee.

2- Fees for registering the initial purchase contract at the Notary:

This is an optional fee in the event that the property is under construction and purchased in installments. As it is not possible to transfer the title deed immediately in this case, where the complex has not yet been prepared, a preliminary sale contract is signed between the seller and the buyer and registered at the notary, to confirm the right of the buyer. However, the value of these fees is estimated at 1% of the value of the property registered in the initial sale contract.

3- Annual property tax (Emlak Vergisi):

Once you obtain a property in Turkey whether you are a nonnative or a Turkish national, you have to pay an annual property tax. This tax is 0.002 of the value of the property enrolled in the title deed, to be paid in two installments: the first installment is paid between the dates 1 - 31 March, while the second installment is paid between 1 - 31 October. You can pay this tax either by going to the municipality to which the property belongs, or you can transfer the amount to the municipal bank account. For example, if the property price is $100,000 dollars, the value of this tax is $200 dollars yearly.

4-Residential complex service charges (Site Aidatı):

They are recurring fees paid monthly for maintenance, repairs, and amenities including cleaning, security protection, complex electricity bills, elevators, etc... These charges are estimated according to the area of the apartment, the complex, the region, and the quality of the service. Fees start from 0 - 1 dollars per square meter of the apartment area. So, if the apartment area is 100 square meters, it may cost an average of 50 dollars per month as service charges.

Second: Real estate taxes on selling a property in Turkey to foreigners and Turks (capital gains tax on real estate):

According to Article 80 of the Turkish Income Tax Law, capital gains tax or "girir vergi" must be paid when the property is sold within the first 5 years of purchase, and if the property is sold 5 years after the purchase, by law you are not responsible for any taxes.

How is the real estate capital gains tax calculated?

The difference between the value of the property when it is purchased and sold is calculated. To illustrate this, we give an example: When an apartment in Turkey was bought in 2018 for $ 100,000 (and the declared price in the title deed was $ 60,000) and later it was sold in 2022 at a price of $130,000 (and the declared price is $70,000), then the difference between the declared purchase and sale prices is $10,000, this is the capital gain. And by law, you have to pay tax on this gain. The value of the capital gains tax falls in brackets ranging from 15% to 35%, and in our previous example, $2,000 must be deducted as capital gains tax, which equals 20% of the net profit. Yet, if the sale was made in the year 2023 and beyond, no profit tax shall be deducted, because the sale took place 5 years after the purchase.

 

There is also a tax on rent revenues that is similar to the capital gains tax, as it is related to the income that you get from your property in Turkey after deducting permissible expenses such as maintenance and so on.

 

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