Property tax in turkey

After the recent increase in real estate sales in Turkey, according to the latest statistics of the General Directorate of Land Registry (TUIK), it is necessary to know the total and additional costs in the process of buying a property in Turkey, especially after foreign investors were exempted from paying value-added tax upon ownership in 2017 

which was estimated at 8% in 2013, and this law applies to Turks who reside outside Turkey for more than six months. 

In this article, we have collected for you the most important types of taxes that must be paid when buying a property, which helps you to obtain complete information before buying

Taxes for purchasing a property in Turkey

 1- Transfer of ownership fees (Tapu Harcı):

It is called the Tapu fee (if the property is ready and the payment is direct). It is a mandatory fee in Turkey for the transfer of ownership from one owner to another, equivalent to about 4% of the declared and specified property value in the title deed (Tabu). It is usually paid equally between the seller and the buyer or according to their agreement; for example, if the property price is 100 thousand dollars, The buyer and seller can each pay a $2,000 property transfer fee.

2- Fees for installing the initial purchase contract at the Notary Notary:

It is an optional fee if the property is under construction and purchased in installments. 

It is, in this case, possible to transfer ownership and obtain the Tapu directly. However, this complex is not yet ready, so a preliminary sale contract is written between the seller and the buy then this sale is registered and installed at the notary; for the buyer to guarantee his right, the value of these fees is estimated at 1% of the value of the property registered in the initial sale contract.

3- Annual Property Tax (Emlak Vergisi):

Once you buy a property in Turkey, whether you are a foreign citizen or a Turkish citizen, there is an annual property tax. The value of the yearly property tax is 0.002 of the value of the property registered in the title deed. It is paid in two installments: the first installment is born between the dates 1 - 31 March, while the second installment is paid between 1 - 31 October, and it is produced by going to the municipality building. The area or the amount can be transferred to the municipal bank account to which the property belongs. For example, if the property price is 100,000 dollars, the value of this tax is 200 dollars annually.

4- Residential complex services fees (community revenues Site Aidatı):

Each residential complex in Turkey has services that include cleaning, security protection fees, complex electricity fees, elevators, maintenance of complex facilities, etc.; for these services are fees called monthly returns, estimated according to the area of ​​the apartment, the complex, the region and the quality of service. It starts from 0 - 1 dollars per square meter of the apartment area and is paid Monthly; if the apartment area is 100 square meters, it may cost an average of 50 dollars per month as service fees.

-5 Electricity and water charges on real estate in Turkey

It is an amount that is paid as a security when the first time the electricity and water meters are opened (and it is retrieved when these meters are closed in case the apartment or property is sold in the future, for example)

The value of the insurance varies according to whether the property is new or if the property has a previous owner

If the property is unique, the insurance value is $150 for electricity and $200 for water, which is a registration fee.

If the property has a previous owner, the insurance value is $100 for electricity and $120 for water, which is considered a transportation fee.

These fees are paid in the electricity and water directorates so that within each region, there is a water directorate and an electricity directorate.

Real estate taxes when selling a property in Turkey

According to Article No. 80 of the Turkish Income Tax Law, capital gains tax or "gelir vergi" must be paid when the property is sold in Turkey within the first five years of purchase. Still, if the property is sold in Turkey after five years of purchase, you are not responsible for any taxes by law.

How is the real estate profit tax calculated?

Profit is calculated as the difference between the property's value when purchased and its value after selling it. To illustrate this, we give an example:

 When an apartment in Turkey was bought in 2018 for $ 100,000 (and the advertised price was $60,000) and was sold in 2021 at $130,000 (and the advertised amount is $70,000), then the difference between the two purchase prices is. The advertised sale is $10,000, this is your capital gain, and you must pay tax. The value of the profit tax is in brackets ranging from 15% to 35%. In our previous example, $2,000 can be deducted, the discount of 20% From the net profit, but if the sale is made in the year 2023 and beyond, no profit tax will be deducted because the sale took place five years after the purchase.

There is also a tax on rent returns similar to the capital gains tax because it is the income you get from your property in Turkey after deducting allowable expenses such as maintenance.

Tips to Avoid Paying Double Taxes When Buying a Property

Double tax is income taxes paid twice from the same source of income. For example, double taxation is paid in international trade or investment when the same income is taxed in two countries.

If a person bound to one country by a nationality bond resides (sometimes dual citizenship) in another country and receives income or makes an investment in that country, then the country to be taxed is a problem to be solved. 

To solve this problem, it will be necessary to identify the country with the tax authority following international legal principles.

Ways to avoid the double tax

1. Domestic ways: The state can prevent the double tax by setting conditions in its law.

2. International methods: One way to prevent the double tax is to conclude international agreements between countries based on sharing powers so that their tax authorities do not conflict.

One of the current laws is to prevent the double tax agreement signed by Turkey and other countries. 

These agreements aim at the entry of foreign capital into Turkey.