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Wednesday

What Taxes Should Buyers of Real Estate in Turkey be Prepared For?

It doesn't matter what type of Turkish property the buyer is interested in, a villa in Alanya or an apartment in Istanbul.

Before concluding a transaction, he must know in advance all taxes he must pay. There are several types of taxes.

What Taxes Should Buyers of Real Estate in Turkey be Prepared For?: eAskme
What Taxes Should Buyers of Real Estate in Turkey be Prepared For?: eAskme

Investors and end users only once during the purchase process cover some of them, and some will have to pay annually after obtaining ownership.

You can get acquainted with these taxes below.

One-time taxes:

In the process of concluding the transaction, the buyer must pay the following one-time taxes:

Transfer of title tax:

The transfer of title tax is a fee charged by the state for the transfer of real estate ownership on behalf of the seller to a new buyer. It is 4% of the total value of the property.

According to Turkish law, this tax must be divided equally and paid by the seller and the buyer.

However, in recent years, buyers have been paying the full amount in case of a purchase and sale of a secondary property. As a rule, those who purchase primarily real estate cover only half.

In addition, some construction companies pay the title transfer tax to attract investors.

Note: Reconstruction projects are exempt from the 4% tax on the transfer of title.

Value added tax:

The amount of value-added tax, also known as the KDV tax, varies from one property to another. The tax department collects it.

Usually, the tax is applied to commercial units, as well as to residential properties that are being renovated.

Most often, the amount of value-added tax varies from 1% to 8%. In some cases, it can reach 18%.

There are several factors determined by the state, based on which its value is formed:

  1. Type of real estate. Real estate is divided into residential and commercial properties. The value-added tax when buying residential units is usually 1%, reaching 18% when buying commercial units.
  2. The area of the property. The area of real estate is also one of the factors determining the amount of tax, especially concerning residential properties. In light of recent amendments approved by the Turkish government at the end of March 2022, its size will be 1% if the area is less than 150 m2, 8% if the area is 150 m2, and 18% if the area exceeds 150 m2.
  3. Location of the property. The amount of value-added tax is determined by the TAPU Department in each municipality. Real estate located in economic or tourist zones is most often taxed at 18%.
The Turkish government has defined some conditions under which a foreigner can be exempt from value added tax if its amount reaches 18%:
  • the buyer does not have a residence permit;
  • the buyer is abroad at the time of the transaction;
  • the buyer was outside Turkey for 6 consecutive months during the current or previous year.

Taxes paid annually:

After the conclusion of the purchase and sale transaction, the owners will have to pay the following taxes every year:

Municipal tax:

Municipalities in Turkey charge an annual fee, which can reach 0.4% of the total value of the property.

This collection is called «EMLAK VERGISI.» It represents several taxes that must be paid to the administration of the settlement from March to May of each year.

This is a fee for services the municipality provides in the area where the property is located.

Capital gains tax

Capital gains tax is levied on:

  1. Owners receive income from commercial real estate (shops, offices, hotel apartments, etc.). The amount of tax varies depending on the nature of the property and is determined by the Tax Administration.
  2. Buyers resold the property before the expiration of 5 years from the date of purchase to make a profit (in this case, the tax is one-time).

Tax on rental income:

Taxation of investment property is mandatory when investments become a source of profit.

Therefore, property owners who rent their property must annually submit their income to the tax inspectorate.

The tax rate on a rented property depends on the amount of income.

Inheritance and gift tax:

A person who has received real estate as a gift or by inheritance must pay inheritance and donation tax.

The tax rate is determined based on the value of the property and the method of obtaining it:

The cost of real estate (Turkish Lira)

Inheritance

Gift

up to 500,000

1%

10%

from 500,000 to 1.2 million

3%

15%

from 1.2 million to 2.5 million

5%

20%

from 2.5 million to 4.9 million

7%

25%

from 4.9 million to 9.1 million and above

10%

30%

Our assistance in buying real estate in Turkey:

Investors and end users wishing to purchase real estate in Istanbul, Alanya or another promising Turkish city should familiarize themselves with Turk.Estate.

The aggregator database contains a wide range of residential and commercial units so that everyone can find a suitable option for themselves here.

To get help with selecting an object, support at all stages of the transaction and high-quality after-sales service, contact the company's specialists directly.

If you still have any question, feel free to ask me via comments.

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Man Behind eAskme

Gaurav Kumar

Gaurav Kumar is the founder of eAskme.com. He is the professional blogger, writer, motivational speaker and online entrepreneur. He the man behind "Blogging for money guide" and "complete domain name guide". eAskme will help you to become an online entrepreneur. You can learn SEO, Money MAKING, SEO, blogging and more.

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