Property tax is one of the first vital issues you should research and learn about, especially if you are planning to buy real estate in a foreign country. Apart from the taxes, you pay when you buy the real estate, there are other taxes you have to pay while you own the real estate, too. In this article, we will explain blow-by-blow for you so that you do not have a single question mark in your mind about tax in Turkey.
What Taxes Are Related to Real Estate in Turkey?
Before buying property in Turkey, it is important to understand the taxation in Turkey. You must first have a tax number for all your property purchases. Then, you can apply to the Turkey tax office and get your tax number by getting a copy of your passport with its notarized Turkish translation.
When you want to buy a property in Turkey, you should know that you will be subject to transaction taxes such as Deed Duty, Value Added Tax, Stamp Duty, and Notary Fees. Also, buying a property in Turkey automatically makes you subject to Real Estate Tax.
If you obtain any rental fee from the property or want to sell your property, you are subject to Income Tax. Each tax type has separate calculation and payment rules.
Title Deed Fee
Before concluding your purchase at the title deed registry, you will be required to pay the Title Deed Fee, calculated for all transactions such as property buying or selling, registration of the rental contract, and annotations of any transaction made at the registry. Both the buyer and seller are separately subject to 2,2% tax over the sales price, payable at the tax office.
Value Added Tax (VAT)
Turkish tax law states that all commercial, industrial and professional transactions made in Turkey are subject to VAT or KDV in Turkish. However, under the following circumstances, the property will be VAT exempt.
- If the seller/owner of the property does not deal with any commercial activity
- If the seller is a company not in the real estate trading business and has held the property for more than two years
VAT is 18%, and property sales in Turkey, including office, residential properties, land acquisitions, etc. are all subject to this tax calculated over the sales price. Different VAT rates exist for residential properties fulfilling certain conditions. Rates vary between 1% and 8% for residential units with a net area of less than 150 sqm with some additional conditions. Residential units with a net area of more than 150 sqm and all other properties in Turkey are subject to 18% VAT.
The sale agreement for a property is subject to 0.948% stamp duty over the highest monetary value stated or referred to in the agreement. Lease agreements are subject to a stamp duty of 0.189%. The seller and buyer are held mutually liable for the payment of the stamp duty.
Annual Property Tax
An annual property tax, rated Turkey between 0.1% and 0.6% of the property value, must be paid before the end of May each year. Contribution to the Conservation of Immovable Cultural Property is levied at 10% of this real estate tax.
Property Type BIG CITIES SMALL CITIES
Residential Properties 0,2% 0,1%
Commercial Properties 0,4% 0,2%
Farms 0,2% 0,1%
Lands 0,6% 0,3%
If you decide to rent your property out, note that you’ll be subject to income tax. The same rule applies when you decide to sell your property too. However, after five years of ownership, no income tax will apply.
2021 Tax Rates Depending on Rental Income in Turkish Lira (₺)
- up to ₺24,000 – 15%
- up to ₺53,000 – for ₺24,000 of the income tax is ₺3,600, the rest of the sum 20%
- up to ₺130,000 – for ₺53,000 of the income tax is ₺9,400, the rest of the sum – 27%
- up to ₺650,000 – for ₺130,000 of the income tax rate in Turkey is ₺30,190, the rest of the sum – 35%
- Over ₺650,000 – for ₺650,000 of the income tax rate in Turkey is ₺212,190, the rest of the sum – 40%
Do Foreigners Need to Pay Property Tax in Turkey?
Yes, property tax has to be paid annually by everyone who owns real estate in Turkey. Municipalities collect this tax, and each is responsible for its administrative boundaries.
How Is Property Tax Calculated in Turkey?
The property tax rate in Turkey varies according to the type of real estate and the city where it is located. According to this, it varies between 0.1% and 0.6%. For example, a 0.2% tax applies to ordinary properties such as apartments and apartments or buildings near major cities. The property tax rate for properties owned in large municipalities is set at 0.4% per year.
Residences in big cities are subject to a property tax of 0.2% annually, while those in the surrounding area are taxed at a rate of 0.1% in Turkey. Commercial properties are taxed at a rate of 0.4% in Turkey, while a tax of 0.6% is applied to land. Yet, these rates are calculated according to the price of the property.
When Is Property Tax Payable in Turkey?
Property tax in Turkey can be paid in 2 installments each year. The first tax period, which starts on March 1, ends on May 31. The second installment is paid in November. Nevertheless, you can pay in full in the first installment period.
Online Payment of Property Tax in Turkey?
There are two ways to pay your Property Tax in Turkey. The first is to visit the municipality and make the payment, and the second is to make the payment via the official website of the municipality.
How to Pay Your Property Tax in Turkey Online?
- Find the official website of the municipality your real estate is located. You can reach the page that accrues real estate tax by choosing online payment from the e-municipal services.
- You need to make sure that the page you are referred to is the official page of the municipality. Besides, note that it is possible to consult the information line of the municipality if you experience any difficulties.
- To pay Property Tax online, you can check it via your Turkish Tax Number and registration number. After filling in the Tax Number, enter the security code and click on the query button.
- It is possible to see the entire Property Tax in Turkey debt breakdown on the screen in front of you.
- After selecting the taxes you want to pay, you can click on the pay button or register them all with the print button below it. After clicking the make payment button, the system redirects you to the payment page.
- You can pay by entering your credit or debit card information. First, you need to choose the card type.
- Fill in the required information. Entering the information, click the pay button. This way, you will have completed your payment.
What Happens If I Pay the Property Tax Late in Turkey?
Consequences of Real Estate Tax Delay Payment
The property owner must pay the real estate tax except for the cases exempted from the real estate tax, Payment shall be made between the specified periods of the real estate tax. In the event of a delay in payment of the tax, a fine of 1.40 percent shall be added to the value of the tax.
On April 1, 2017, the government enacted a law exempting foreign property buyers from paying VAT in Turkey. The sale of residential property VAT exempt is now possible. The Turkish government has exempted foreign investors from paying the 18% value-added tax (VAT) on real estate purchases. Foreigners can now take advantage of outstanding investment opportunities.
Property exempt from VAT is available to people who qualify:
- Foreigners who do not live in Turkey permanently
- Turkish citizens with residency or work permits who have been living in another country for more than six months
- Organizations that have not established any headquarters or legal residences in Turkey.
- It is important to note that Turkish citizens living in other countries who work for Turkish institutions or establishments will not be eligible for VAT exemption.
Turkey has always been a desirable destination for foreigners. As a result, the country offers endless opportunities for businessmen, professionals, students, and retired individuals to come and invest in its real estate with the promise of giving second citizenship.
Foreigners and expats looking to live in Turkey can get Turkish citizenship by investment within two months or less. If you’re interested in buying real estate in Turkey, we’ve created this ultimate guide that takes you through the ins and outs of investing in Turkish real estate.