Turkey has a very big real estate market which is made up of both locals and foreigners. This is a market that is made up of various investors. Turkish real estate comes with numerous taxes. Investors are expected to pay several taxes in the country. Turkey has specific property taxes for foreigners.
The purchasing tax
In Turkey, the purchasing tax of a property is also called the title deed fee. Whenever you are buying a property in the country as a foreigner, you need to collect the title deed. This is the most important document that you will get on purchasing a property. This document is also known as the TAPU certificate. It is used to mandate the fact that the property has been transferred from one owner to the next. The document also goes on to state the rightful owner of the property. On purchase of the property, you will be given the document from the Director of the Land Registry and Cadastre when you complete the transaction.
The Value Added Tax (VAT) of a property
Based on Turkish legislation, all professional, industrial, and commercial transactions are supposed to pay tax. There are several exceptions. These include:
If the present owner of the property is not involved in any business engagement in the country.
If the present property owner is not an avid party in the real estate marketplace and has been the property owner for over two years.
There are VAT exemptions for foreigners who have just bought their first properties. These include:
Commercial properties – 18% VAT
Residential properties – Between 1% and 18% VAT
For flats with a net area of under 150 square metres – a 1% VAT
For units with a net area of over 150 square metres – 18% VAT
As an investor, you are expected to pay various taxes. These include property taxes. Investors are taxed on their properties at certain periods of the year. This means that property owners, usually pay taxes. As a foreign property owner, you will have to pay taxes on your property.
For properties with several owners, the taxes will be split among the different owners according to their various ownership ratios – even if this is different or equal. In Turkey, there is tax exemption which is obtained by applying to the concerned municipality that is in charge of handling the case. Foreigners in Turkey are expected to pay taxes, which they must pay at specific times during the year.
Taxes on rental income in real estate
As a foreign real estate investor in Turkey, your aim may be to make money from the real estate market through rental incomes, just know that there are some taxes involved here too. This is how it is estimated:
Rental income of about 53,000 Turkish Liras: You get to pay a tax of 3,600 Turkish Liras on the first 24,000 Turkish Liras, while the remaining part of the income has a taxing rate of 20%.
Rental income of about 130,000 Turkish Liras: You are expected to pay 9,400 Turkish Liras for the first 53,000 Turkish Liras. Then the remaining amount of the income is taxed at 27%.
Rental income of more than 650,000 Turkish Liras: You get to pay about 212,190 Turkish Liras on the first 650,000 Turkish Liras, while the rest of the amount gets a 40% tax rate.