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What You Need to Know About Luxury Property Tax in Turkey

11/04/2022 What You Need to Know About Luxury Property Tax in Turkey

What Is the Context of Luxury Property Tax in Turkey?

The subject of the luxury property tax applies to properties in Turkey within the borders of Turkish territory, which has the status of a dwelling, and which in 2020 be worth more than 5 million Turkish liras, covered by the valuable housing tax.

The concept of "property as housing" includes each residential building, which forms a separate part of the estate, as well as every separate part of the buildings containing one or more separate parts. This means that the parts of the independent housing estate, the values of which are calculated separately, are each part by itself.

The Valuable House Tax base for a residential building is determined according to the valuation calculated by the General Directorate of Land Registry and Cadastre. After the valuation phase is completed, the directorate issues notice for properties whose value exceeds 5 million liras. The results are available from the institution's official website. Owners have 15 days to object to the valuation.

How Much is The Luxury Property Tax in Turkey?

According to the legislation prepared by the Treasury and Finance Ministry, residential properties with a value between 5.25 million liras and 7.87 million liras ($600.000) will be taxed 0.3 percent of the amount over the base level.

Under amendments to Act No. 7194; this tax has been applied to real estate that meets the requirements, starting in 2020.

The status of luxury property tax in Turkey was further amended by article 24 of the Land Tax Act, which delayed the introduction of the valuable home tax until 2021. The tax was reported and published in the National Gazette on 15 January 2021.

How is Luxury Property Tax Calculated?

The value of the tax is calculated according to the value of the cost of building per square meter in addition to the value of the land share specified for the property. Here is the calculation method for luxury property tax in Turkey:

The extra tax rate for residential buildings worth up to 10.5 million liras ($750.000) is 0.6 percent for the amount over 7.87 million liras.

Houses with a value of more than 10.5 million liras are taxed 22,500 liras ($1700) plus 1 percent of the amount over the base level.

If the property is registered in the name of more than one owner, then the tax is divided according to the value of each owner’s share of the property separately.

Who Pays The Luxury Property Tax?

Luxury property tax in Turkey is paid by those who have real estate in Turkey that is worth more than 5 million Turkish liras. This tax includes all luxury real estate in Turkey, such as places like villas, independent residential buildings, residences, or mansions.

If your property in Turkey exceeds 5 million Turkish liras you can also obtain Turkish citizenship by real estate investment. You can acquire Turkish citizenship after your purchase is determined by the Ministry of Environment and Urbanization, provided that annotation of at least US$ 400,000 or equivalent in foreign currency or Turkish lira is included in the title deed records that it will not be sold for three years.

When is Luxury Property Tax Paid?

For a property with a price exceeding five million Turkish liras, the tax is valid from its buying date and must be paid one year after this date. Here, we must note that this tax is considered an annual tax, and the value of the luxury real estate tax in Turkey is paid in two installments. The first part is paid in February, while the second part is paid in August of each year.

In Which Cases Are You Exempted From Luxury Property Tax in Turkey?

Luxury real estate tax exemption is possible in Turkey. Under the special conditions as stated below:

  1. If the property is burned or demolished, or if the property is no longer convenient for usage, then the property is exempted from tax from the date of the occurrence of any of these events.

  2. There are also cases of exemption from luxury property tax even if the property value condition is met, including the following cases:

  3. Apartments and residential real estate in Turkey that are owned or has usage right by municipalities, universities, and the Presidency of the Housing Department are exempted from this tax.

  4. If the owner of the property owns more than one property in Turkey that fulfills the requirements of the tax assignment, the smaller property is exempted from this tax, by proving that it is his only residence.

  5. If the property has several owners, the owner of the least shares shall be exempted from the luxury property tax, provided that his share of the property is his only residency.

  6. Residential properties belonging to the consulates of foreign countries and international organizations located in Turkey, such as the residences of ambassadors and United Nations delegates, are also exempted from luxury property tax in Turkey.

Finally, residential apartments and real estate under construction are committed by construction and real estate companies whose ownership has not been transferred to individuals yet including apartments obtained by the building contractor from the project, provided that his apartments are not rented or in use in, are exempted from luxury property tax.

Many wish to prelude the field of real estate investment in Turkey. And also, some wish to buy a property in Turkey of high value, either for housing and luxury residence, for real estate investment in Turkey, or even to obtain Turkish citizenship by buying property. If you are one of them, we highly recommend that you always keep up with the tax laws related to real estate, which are officially announced in the Turkish newspapers, in this way you are fully aware of anything related to the field of real estate, investment, and citizenship.

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