In this article, we are going to explain everything about property taxes in Turkey. Today, Turkey is one of the best markets to invest money on properties because of having one of the most competitive tax rates in COED countries and tax laws are so evident, objective and also supports international standards.
Here I should emphasize that there is no difference in tax legislation for Turkish citizens and foreigners. Here we provided every information about taxes in Turkey for foreigners to invest wisely
The Turkish legislation is classified into three main types:
- Income tax
- Taxes on expenditure
- Tax on assets
Tax on assets have three categories:
- Property taxes
- Motor vehicle taxes
- Inheritance and gift taxes
Here we are going to discuss everything about Turkey’s property tax.
Property taxes in Turkey
If you consider buying property in Turkey or any other foreign country , you should know about property tax legislation in that country. In addition to taxes, you pay when you purchase a property, there are other types of taxes such as annual tax, monthly tax and also value added tax (VAT).
Tax of buying property in Turkey
When you buy a property such as buildings, apartments, villas and lands in Turkey, you are issued to pay property taxes around 4 percent of the property’s price. This tax is named title deed registration tax (tapu) and imposed by the real estate registry department in Turkey .
This fee is usually divided between the seller and the buyer. But based on an agreement between two sides of a deal, only the buyer or seller is obligated to pay the tax.
Value added tax (VAT)
When you want to sell a property in Turkey, you should pay value added tax. In essence, value added is all about the difference between the price of buying and selling a property in Turkey. VAT is usually added to the property’s whole price; therefore, you aren’t bound to pay the amount separately.
According to Turkish law all commercial, industrial and professional transactions made are issued to VAT or KDV in Turkey.
However, under certain circumstances, you are exempt to pay VAT:
- If the seller don’t have any business with any commercial activities
- If the seller isn’t in real estate trading business and possessed the property for more than five years
How much is VAT property taxes in Turkey:
- VAT for commercial properties are around 18%
- VAT for residential properties are between 1% to 18%
- VAT for residential properties under 150 m2 are around 1% to 8%
- VAT for residential properties over 150 m2 are 18%
VAT is enforced for 5 years, therefore if you attempt to sell the property in the first 5 years. You have to pay VAT. You should note that this law is just for residential properties and commercial properties always have to pay value added tax, when they sell the property.
Annual property taxes in Turkey
When you own a property in Turkey. You have to pay the annual tax. This tax should be paid twice a year, in May and November but also you can pay it in one installment.
This tax is based on the type of property and also which city is the property located in. Annual property taxes in Turkey are between 0.6% to 1% that is calculated over the price of property. Here in CityRealtyTurkey our experts can help you to figure out everything needed for annual tax for property in Turkey.
Annual property tax in Turkey:
|Type of property||Property taxes in local cities||Property taxes in Metropolitan cities|
Stamp duty for property taxes in Turkey
Stamp duty is a kind of tax that the government includes for any kind of agreement, contract and investing bonds, so you can confirm the contract’s accuracy.
The sale agreement for a property is 0.948% stamp duty which is determined by the value of the agreement.
Income tax of property taxes in Turkey
As shown in the above sentence; if you decide to rent your property and have income from it, then you have to pay income tax for it. If you decide to sell your property within five years, you have to pay income tax. Like other income taxes, the tax on property rental income in Turkey is progressive. So, the more you make from your rental properties, the more you will pay taxes.
Of course, the income taxes rate is calculated according to rental income in the Turkish lira:
- If the rent is up to 14800 lira, you have to pay 15% income tax
- If the rent is up to 14801- 34000 lira, you should pay 20% income tax
- If the rent is up to 34000-80000 lira, you should pay 27% income tax
- If the rent is over 80000 lira, you should pay 35% income tax
Inheritance and gift taxes of property taxes in Turkey:
Another kind of property taxes in Turkey is the tax you have to pay when you get a property by inheritance or getting a gift. The inheritance and gift taxes are around 1% to 30% of the property’s value, and according to law you can pay it in 3 three years and two payments.
Valuable housing tax for property in Turkey
According to new legislation from January of 2021, an extra tax will be paid for houses with the value of more than 5.25 million Turkish lira.
So residential properties with a value of around 5.25 to 7.87 million liras will be taxed 0.3% of the property’s value.
properties with a value between 7.871 to 10.455 million liras will be taxed 0.6% of the property value.
properties with a value over 10.455 million liras will be taxed 1% of the property value.
The General Directorate of Land Registry and Cadastre will calculate the house’s valuable housing tax. After the valuation process is completed. A notice will be issued to properties whose value exceed 5 million liras, also results are available on the official site. The property owner can object to the tax in the first 15 days.
The owner should go to the nearest tax department by 20 February along with the valuable housing tax statement and tax form given by the municipality.
The tax can be paid in two equal payments in August and February of the following year.
There are two types of property insurance in Turkey:
- Compulsory insurance which consists of earthquake insurance (DASK)
- Non-compulsory insurances which have many different types that you can choose according to your preference
After explaining property taxes in Turkey, it is also important to talk about the tax number.
The Tax number is an ID number you need for any registration and financial transaction in Turkey. A Tax number is a ten digit number given to a person.
If you are a foreigner in Turkey, you need a tax number for anything you do, for example, opening an account, purchasing a property, for utility services, paying earthquake insurance, using health services, issuing insurance, doing a notarial process and also applying for residency and so on.
How to obtain a tax number:
- Get your tax number online
- Get your tax number by visiting tax offices
You can get your tax number online; just follow the steps below:
- First, you should visit this link https://ivd.gib.gov.tr to tax affairs in Turkey
- Then on main page you should click on Yabancılar İçin Potansiyel Vergi Kimlik Numarası (application for non-citizen potential tax number)
- Then in a new page that opens you can see the form for applying tax number
- So you can fill and send the application and after that your tax number will be shown on the screen and also texted to your cell phone
- After getting the tax number, you should go in person to tax offices (vergi dairesi) or the internet system of Immigration Department (Göç İdaresi)
- And pay for the card
Also you can get your tax number by going to tax offices:
- You can go to local tax offices and apply for tax number
- You should have your necessary documentation (listed in below)
- Then you can register for tax number
- And finally, pay for the card to obtain your tax number
Necessary documentation to get tax number:
- Original passport
- Filling the form
- Copy of the passport
- Active sim card
- home lease agreement
- Water or electricity bill in the name of applicant
Note: if you don’t have an active sim card, you can only register for tax number by visiting tax offices
After getting your tax number, your tax number is monitored in all financial institutions so you can freely open an account in a bank and after that do any financial business you have for example purchase a property and so on.
If you have any problem in getting your tax number here in CityRealtyTurkey we can help you to get your tax number.
Now after knowing all about property taxes and obtaining a tax number you can purchase a property.
how can you buy a property in Turkey:
The Turkish land registry office is in charge of enrolment of properties in Turkey. Earthquake insurance is needed when you are buying a commercial property in Turkey.
Another thing you should know is that pre-sale approval is needed to buy a property in Turkey and you can get it through the Turkish land registry offices.
Foreigners who want to purchase a property in Turkey should get approval from the Turkish Council of Ministers.
Here in CityRealtyTurkey, our experts can help you thoroughly in the process of purchasing a property in Turkey so you can feel assured that you know anything necessary in this process and obtain the best property you want.
How to pay property taxes in Turkey
You can pay your property taxes in Turkey by different methods:
- Pay your property tax online
- Pay your property tax through bank
- Pay your property tax through municipality in metropolitan cities
Consequences of not paying tax for property in Turkey:
By the law you should pay your tax for property in Turkey in time, if you delay in paying your taxes, 1.4% of the fine you get for your tax value. The fine can’t be eliminated but each year you delay your tax for property in Turkey it will be added.
How can you get Turkish citizenship by investing in property
One way to get Turkish citizenship is through purchasing a property in Turkey that values over 250000 dollars.
Through this investment you can get your Turkish citizenship but you should note that according to law you can’t sell your property for three years to obtain citizenship. In CityRealtyTurkey, we can help you through the process of finding the best property to get your citizenship easiest and fastest.
Last advice in buying property in Turkey
In recent years property investment in Turkey has been one of the best investing opportunities in this country. But there are some things you should know and at CityRealtyTurkey we provide proper real estate consultancy. CityRealtyTurkey is one of the leading and successful real estate agencies in Istanbul, which provides the most befitting advice to buyers and sellers who reach us.
Is property tax in Turkey for foreigners and citizens differ?
As I mentioned, there is no difference in tax legislation for Turkish citizens and foreigners
Tax in Turkey 2022, how has it been changed?
In 2022 Turkey increased the corporate tax rate for financial sector companies and also provided VAT exemption for the manufacturing and tourism sectors.
How to pay annual property tax in Turkey
The annual tax payments are accepted at the municipality of the district to which your property belongs.