How to Reduce Property Tax?

There is a property tax that property owners are obliged to pay in Turkey. This type of tax is seen as a wealth tax in the basic sense and completely covers the wealth and real estate investments that the person has owned, such as land, land, and building.

This type of tax, an indicator of considerable wealth in Turkey, has an important place in practice in terms of the state and the public. Recently, the procedure for submitting property tax returns has been abolished, and the taxpayers’ declarations regarding their properties have been made detectable with the “Property Tax Notification Form.” While the taxpayer’s identity, address, title deed, and tax information are included in this notification form, no essential information is given on the form. Therefore, this form alone is not considered sufficient to receive a declaration. The documents required for the declaration are listed below:

  • Turkish tax number
  • A notarized and translated copy of the passport
  • Property evaluation report
  • four personal biometric photographs

Experts in the field from the municipality evaluate the taxpayer according to the above information, approve the necessary updates every four years according to the report in these declarations, and calculate the tax value for the following year. Taxes are calculated based on property type, large and small cities, and the building category. Contribution to the Protection of Immovable Cultural Heritage is applied at 10% of the property tax.

Apart from this, if a building has both the owner and the usufruct owner, the usufruct owner is responsible for the obligations of the building. The debts of those who own a building with common rights are determined in proportion to their shares. Since the shares in the common ownership are determined, the liability arises in proportion to the shares. Owners are responsible for taxation in a chain in the case of a joint partner. The tax laws in Turkey state that all industrial, commercial, and professional transactions carried out in the country are subject to Turkish VAT. However, it may be exempted in the following cases:

  • The first property of every international investor is exempt from VAT, provided they have not previously resided in Turkey.
  • If the property seller is a company (not in the real estate business industry) and has held the property for more than two years
  • If the owner/seller is not engaged in any commercial activity.

Well, let’s find out is it possible to reduce the property tax we have to pay annually in this article.

1. Limit Housing Improvement

In Turkey, you have to pay an annual tax for the savings and gains from real estate. This type of tax is also known as the wealth tax. The changes and innovations you will make in the property you have purchased increase the income you will earn from your property because the value of your property increases indirectly. You can also reduce the amount of tax you pay if you set a certain limit when innovating on the property you buy.

2. Check if You are Eligible for Tax Exemption

Being or having tax exemptions seems like a way to lower your tax bill, but tax exemption can be a nuisance at times. If you are an investor coming to Turkey from abroad or if you want to contribute to the country by buying property in the country and gaining citizenship, it is possible to fulfill some qualifications and be exempt from tax. Another possibility is that you may be exempt from tax if you buy a property within the country that meets a certain standard rule, however, as the rules vary a lot, we recommend that you research this issue in detail with our real estate agents during the purchase process.

3. Investigate the Value of Nearby Homes

Before buying a house, you can have our real estate agents calculate how much tax you have to pay by researching the value of other properties in the neighborhoods of the houses you visited or examined. In this way, you can buy knowing the amount of annual tax you have to pay and you can profit from this transaction.

4. Get Help From Appraisers

It is very important to evaluate a property before purchasing, which is a subject we touch upon in each of our articles because it prevents any surprises that may be noticed you after the purchase and allows you to calculate the investment and thus the profit. In this context, the net tax payment amount can be calculated over the annual real estate valuation and the amount to be paid by the house. For this calculation, research is made depending on the property, shape, location of the house, and many other factors.

5. File Tax Complaints

According to the legal system of the state of the Republic of Turkey, the regulation of tax cases between taxpayers and the state in Turkey is regulated by a series of detailed laws and regulations.

In principle, the Turkish tax regime is based on a self-assessment system where individual taxpayers are responsible for declaring their taxable income. Taxpayers must determine whether a particular type of income is taxable and when they should declare it to the Tax Office.

In this sense, you can get rid of possible extra fees and pay only the raw tax fee by making a tax declaration while purchasing a property.

6. Check Your Tax Invoices

Have all your annual tax documents checked regularly to avoid any confusion or mistakes? Do not forget that the value of a house in Turkey is not only related to the interior of the house but also due to its location, neighborhood, and various features, the price may increase in terms of value. Thanks to this follow-up, you can both take your tax situation under control and determine the increase in the amount to be provided in the sale of your house.

What are Current Property Taxes in Turkey?

Property tax in Turkey varies according to the type of property as well as the city in which it is located and ranges from 0.1% to 0.6%. Therefore, a 0.2% tax applies to ordinary properties such as apartments or buildings near major cities. Turkey’s property tax rate for properties owned in large municipalities is set at 0.4% per annum. In Turkey, residences in big cities are subject to property tax at an annual rate of 0.2%, while those in the surrounding areas are taxed at a rate of 0.1%.

Is it Mandatory to Pay Property Tax in Turkey?

Income from renting a property in Turkey is taxable in the country. Those who buy property, whether foreign or not, are also obliged to pay the necessary taxes. The legislation regarding the taxes applied in Turkey can be explained to you in more detail with our real estate agents. Our experts can also provide the necessary legal advice for those who want to invest in Turkey.

What Happens If Property Tax Is Not Paid in Turkey?

You should be aware that some penalty procedures apply in case of non-payment of property tax. In the first stage, if there is a delay in paying a certain rate, a penalty will be added. In case of delay, it will be added as a fine of 1.40 percent of the total tax value.

This fine cannot be deleted, but is added every year it is not paid, it is stipulated in the law that this tax cannot be reduced if it is time-barred and the subject of the case is referred to the Turkish courts for decision. The law specifies that the tax start date will be taken into account.

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