Turkish Real Estate Taxes

Turkish Real Estate Taxes Explained

In buying real estate in Turkey, there is generally tax involved. For any property purchased in the country, there is a tax of 4% of the total value of the land. 

This land value is usually lower than the general price of the property. By Turkish real estate law, the seller pays a 2% tax, while the also pays a tax of 2%.

Paying Taxes in Turkey

Both locals and foreigners pay real estate tax on any transaction in the country. The taxes that foreigners pay in the country’s real estate sector is a significant aspect of the taxing system of the country. 

All investors in the country are expected to pay taxes regularly. In addition, all real estate taxes owed to the government are paid regularly throughout the year. 

The Value Added Tax (VAT)

Under the legislation of Turkey, any real estate transaction involving industrial, residential, or commercial properties is subject to VAT. But there are some exceptions:

• If the current property owner does not have any business engagements in Turkey.
• If the current property owner does not have any business in the Turkish real estate industry and has been the property owner for over 2 years. 

Also, for first-time property overseas buyers, there are the following VAT exemptions. These are:

• A VAT of 18% for units whose net area is over 150 square metres.
• A VAT of 1% for flats whose net area is below 150 square metres.
• A VAT of between 1% and 18% for residential real estate properties.
• A VAT of 18% for all commercial properties.

Stamp Duty

Stamp duty is a type of property tax that the Turkish government imposes on legal real estate papers and documents. This usually involves the transfer of property or assets. The stamp duty is usually paid when buying property in Turkey. When you sign the property purchase price agreement, there is a stamp duty rate that has to be paid. This stamp duty is about 0.948% of the total agreed value that is stated on the contract. 

Annual Turkish Property Taxes

There are usually yearly taxes on property in Turkey. The value of the tax depends on the property size. It is also dependent on the property type and its location. Many online property tax calculators are used to figure out the total value of this tax. 

In Turkey, all property owners are expected to pay an additional yearly tax to the government. Since Turkish cities are divided into both small and big, the real estate tax in the country varies based on the property type and city size. For example, in Istanbul, the yearly property tax will be about 0.2% of the total value of the property. The annual property tax in Turkey is decided in the following way:

• Big cities: In the big cities, residential properties have an annual tax of 2%. Others are farms (0.2%), lands (0.6%), and commercial properties (0.4%). 
• Small cities: For small cities, the annual taxes on residential properties is 0.1%. Other taxes are for farms (0.1%), lands (0.3%), and commercial properties (0.2%).

Income Tax in Turkey

If you have a property that makes you income through regular rent, you will have to pay an income tax. This income tax is estimated by the accrued gross income. Also, there is a property sales tax to pay should you sell the residential or commercial property. In addition, there is usually no income tax after owing the property for five years. 

Inheritance or Gift Taxes in Turkey

If you have been gifted property or you inherited any piece of real estate, you will have to pay taxes on it. The taxes that you pay can be between 1% and 30%. The payment can be spread in two installments for three years.