Real Estate Disposal Phase

Both foreign investors and Turkish owners go through the same process in the sales of the property. Income taxes are subjected to the ones who sell their property 5 years after the purchase. There are taxes with types in the real estate sector, such as value-added or deed mortar, not specified for foreigners.

For these to be considered carefully, you should be able to process your needs, plans, and decisions, such as staying in Turkey and resuming your life, alone or with your family. Or as your choice of investment and your possible expectations of it.

Sale of Real Estate

There is no discrimination between the locals and foreign nationals in real estate sales. In the acquisition phase of real estate, sales are to all nations except for Syria, Armenia, Cuba, North Korea, Nigeria, and Yemen.

Income Tax on Real Estate Sales

• After acquiring the real estate, people who rent out the property and earn it should pay income tax on their rental income.
• If the real estate is not sold until five years, the value increase during the disposal of real estate is subject to income tax.
• If the real estate is obtained from donation, inheritance, or not an equivalent to value, or even if the value for money is acquired, there is an increase in the value obtained after the disposal of real estate after five years of holding not subject to tax.

Capital Gain Taxation in Real Estate Sales

• People who get a value surplus with their real estate, when they sell it, they declare their income with an income tax declaration annually.
• The tax base can be calculated by subtracting the real estate acquisition value from the sale price.
• And if the difference is positive, it is declared; and if it becomes negative, it is not.
• The taxable income determination is determined by deducting real estate acquisition value alongside the expenses and taxes incurred as a result of the disposal and remaining under the seller’s responsibility from the sale price.
• The acquisition value is increased regarding the said increase rate if the increase in Producer Price Index is 10% or more between the purchase and sale period, called cost indexing.
• 14,800 TL of the capital gains obtained during one calendar year are exempted from income tax. So, if there is a difference between the purchase and sale below this amount, a declaration is not necessary.

Title Deed Fee After the Sale of Real Estate

When disposing of real estate in Turkey, 2% of land registration fees are paid; the deed fee calculated over the sale price is charged separately from the property buyer and the seller. The land registry fee must be paid to the tax office before going to the land registry office.

Value Added Tax on Real Estate Sales

The value-added tax is applied to the sale price, making a commercial gain if the buyer of the real estate is engaged in the purchase; and sale of real estate during the sale phase. Value Added Tax is not applied to people who acquire the property for their use and do not earn commercial gain through trading.

If the multiple sales within a calendar year are suspected by the Ministry of Treasury and Finance, the person will be classified as a merchant, and VAT is applied to the sales made by the merchants.