Property tax is something that can be quite difficult to figure out, especially if you’re buying a property in a foreign country. Apart from taxes, you pay when you buy the house, there are other taxes involved such as annual taxes, plus the VAT.
If you intend to invest in real estate in Turkey, get in touch with us to receive advice from our real estate advisors.
Purchasing Tax (Title Deed Fee)
When you buy a house in Turkey, you get a title deed, “Tapu” in Turkish, which comes with a fee of four percent of the price of the property. This amount is usually divided into two and paid by the buyer and the seller. However, depending on the agreement between the two sides, you might be required to pay the whole fee as the buyer, or vice versa.
VAT (Value Added Tax)
Under Turkish law, all commercial, industrial and professional transactions made in Turkey are subject to VAT. There are some exemptions though:
- If the current owner of the property isn’t involved with any commercial activity,
- If the current owner of the property isn’t in the real estate trading business and has held the property for more than two years.
VAT is 18 percent in Turkey. If the property you’re going to buy doesn’t fall under the above categories and is a commercial property, you’ll be required to pay this percentage, calculated over the sales price. If you’re buying a residential property with a net area of less than 150 m2, you’ll pay a VAT at a rate of between one and eight percent. If the area is more than 150 m2, you’ll be subject to 18 percent VAT.
When you’re making the sale agreement, you’ll also need to pay 0.948 percent stamp duty, calculated over the value defined on the agreement.
Annual Property Tax
When you hold a property in Turkey, you’ll also pay an annual tax. This tax differs depending on the city and type of the property. For example, if your property is in Istanbul, the annual tax will be 0.2 percent, calculated over the value of the property.
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If you decide to rent out your property, 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 percent
- up to ₺53,000 – for ₺24,000 of income the tax is ₺3,600, the rest of the sum – 20 percent
- up to ₺130,000 – for ₺53,000 of income the tax is ₺9,400, the rest of the sum – 27 percent
- up to ₺650,000 – for ₺130,000 of income the tax is ₺30,190, the rest of the sum – 35 percent
- Over ₺650,000 – for ₺650,000 of income the tax is ₺212,190, the rest of the sum – 40 percent
Inheritance or Gift Tax
If you acquire a property through inheritance or donation, note that you’ll need to pay a tax, ranging from one percent to 30 percent. You can pay these taxes over a period of three years, in two installments.