What are the Property Taxes in Turkey?

Before buying a home in Turkey, it’s important to understand the tax laws. The Turkish government seeks to develop its economy through the most competitive industry, Turkish real estate. It gives investors everything they need to enter the US real estate market. It also sells houses and flats in Istanbul and other cities, attracting international students, tourists, and real estate investors to Turkey.

Foreigners and Turkish people alike pay additional taxes on Turkish real estate. Foreigners are exempt from all taxes. There are many rumors, which is a deception by persons who use foreigners unaware of Turkish real estate rules and tax system. So, when buying a house in Turkey, look for a real estate business that offers free tax advice.

Those looking to buy property in Turkey often inquire about the overall cost of the property, taxes, and other fees. The questions have become an obsession for several people. According to prior studies, Turkey will lead the real estate market due to its attractiveness and rapid economic expansion. The decrease in real estate taxes in Turkey has increased foreign demand for many types of real estate.

In Turkey, the real estate tax is the amount paid by the buyer and seller to the tax department and the real estate authority when buying or selling a property. Foreign buyers pay the same tax as Turkish buyers. The Turkish government’s property taxes do not conflict with the conditions. Turkey’s low property taxes provide it a competitive edge over other countries, especially in Europe.

Should You Pay Tax When You Buy Property in Turkey?

Yes, annual property tax should be paid by individuals who own real estate within Turkey’s borders. Each municipality collects its tax which arises from ownership within its administrative borders.

If you purchase a property in Turkey, it’s mandatory to pay the tax. Even though it is simply the 1.5% buyer’s tax and stamp duty (a sliding scale of 0.15 to 0.75%) on the acquisition price.

Individuals can pay property taxes each year in two installments. The first installment of the tax payment period starts on March 1 and ends on May 31, while the second installment is paid in November.

Moreover, the individual has the choice of paying the full payment in the first installment. On the other hand, you have two ways to pay your property tax. First, visit the municipality and make the payment. Second, make the payment online through the municipality website.

What are the Taxes for Property in Turkey?

There are two types of taxes for properties in Turkey: real estate tax and valuable housing tax. The real estate tax is a municipal tax imposed on the number of properties in Turkey, including land and buildings. The appropriate charge rate changes depending on the classification of the property.

Valuable housing tax is imposed on residential properties at progressive rates. Stamp Duty is the sale contract for a subject to 0.948% stamp obligation over the most elevated money-related value expressed or alluded to within the understanding. For example, renting agreements are subject to a stamp obligation of 0.189%. Both the dealer and buyer are held commonly obligated for the installment of the stamp obligation. You can find the taxes for property in Turkey below.

1. Purchasing Tax (Title Deed Tax)

The Turkish title deed is essential for owning a property in Turkey. It includes the information about the owner and property registered and supplied by the Turkish General Directorate.

There are two types of tapu: The Blue tapu and the Red tapu.

Blue tapu includes co-ownership. Land ownership indicates the title of the land; it does not include any dwellings. The title will inform you what share of the overall property you own.

However, the red tapu is exclusively owned by the unit listed on the title document. Or commercial (kat irtifaki, kat mulkiyeti). Construction servitude highlights a work in progress. However, construction servitude refers to the completion of development where local officials inspect the property building.

The buyer should ensure title deed clearance before registering or claiming the title. When buying a home, you get a “Tapu” in Turkish, which costs 4% of the purchase price. So, even if the purchase price was paid in Euro or USD, the government chose to show the title deed in Turkish Lira. The amount is split between the buyer and the seller. Depending on the contract, the buyer may be compelled to pay the full sum.

If you want to get a Turkish title deed, follow the steps listed below.

  1. Book an appointment with the local title deed office and take your passport and ID.
  2. Agreement on a declaration value for the transaction between the parties, in which stamp duty is applied. The buyer pays for this.
  3. Stamp duty is paid by bank transfer.
  4. The title deed is approved and signed by the seller by ensuring the purchase receipt and confirmation of transferring that title deed without any problem.
  5. Title deed signed & accepted, including the charges on it by the buyer.
  6. The new owner receives the original title deed.

The value of the title deed fees in Turkey is calculated based on 15 per thousand of the property prices sold. So, for example, if you bought or sold an apartment for US$100,000, you will have to pay 15 per thousand of this value, equal to US$1,000. Therefore, the total amount of the title deed costs US$3,000 paid by the buyer and seller equally.

2. VAT (Value Added Tax)

Taxes on goods and services delivered in Turkey range from 1% to 18%. But the overall rate is 18%. Imports constitute input VAT, whereas VAT calculated and collected on sales is output VAT. Input VAT subtracted from output VAT in the tax charge office’s VAT return. Assume output VAT exceeds input VAT, with the excess paid to the relevant tax office. If input VAT exceeds output VAT, the adjustment is carried forward to be offset against future output VAT. Except for exportation and sales to a venture motivator, there is no cash discount to recover overabundance input VAT.

The Turkish VAT principles require tenant entities to calculate VAT on installments to foreigners. The tenant entity calculates and pays the VAT to the corresponding tax office, where it is treated as input VAT and offsets it within the same month. It is therefore not a tax on the resident or nonresident entity, but on the cash flow impact if the output VAT is insufficient to offset the input VAT. VAT is collected at the moment of importation. The VAT rate is the same as for domestic exchanges. The amount of the merchandise is the VAT base. All costs are accrued until the single official report is recorded.

Different types of VAT can be found below.

  • Reduced Taxes: The delivery of goods and services such as agricultural products of raw cotton, supply, and leasing goods, the diminished rate is 1%. But for the delivery of other goods and services such as books and textiles, the reduced rate is 8%.
  • Import and Export Taxes: Importing goods into Turkey is taxable regardless of the merchant’s position or the nature of the sale. The VAT is required to import goods and services into Turkey, and administrations are expected to decide the tax burden. Likewise, any exchange absolved in Turkey may be absolved as a result. Import VAT is required at the same rates as local products and services. In the instance of importation, the assessable event is the actual importation. Importation of equipment and gear with an IIC is VAT-free.
  • Property Tax: Turkish law states that all commercial, professional, and industrial transactions held in Turkey are VAT. However, under some conditions, the property will be VAT exempt. These conditions occur if the seller of the property isn’t dealing with any commercial activity and if you consider acquiring a residential property, the VAT rate ranges from 1% to 18%, depending on the net area.

3. Yearly Property Tax

A yearly property tax is exacted on the property payable at the tax office and ought to be paid some time recently May each year. Taxes are calculated on the premise of property type, vast and minor cities, and category. Commitment to the Conservation of Immovable Cultural Property is appropriate at the rate of 10% of the genuine bequest assessment.

Property Type

Tax in Small Cities

Tax in Big Cities

Farms

0.1 %

0.2%

Residential Properties

0.1 %

0.2%

Commercial Properties

0.2 %

0.4 %

Lands

0.3 %

0.6 %

4. Stamp Duty

Stamp duty is an official type of tax levied by the government, resulting from all contracts. It means the completion of agreements or transactions between individuals and institutions on official papers.

According to the General Communiqué submitted to the Official Gazette, the documents subject to stamp duty consist of many official documents. For instance; guarantees, pledges, termination letters, undertakings, documents for pre-owned vehicle sales, and real estate sales contracts. Moreover, stamp duty rates in Turkey range from 0.189% to 0.948% in 2021.

5. Inheritance or Gift Tax

An inheritance or gift tax is a type of tax that arises as a result of the transfer of goods belonging to persons with Turkish Citizenship either by inheritance or gift.

Gift tax rates range from 10% to 30% of the appraised value. Moreover, inheritance tax rates range from 1% to 10% percent of the inherited amount. Besides, both taxes are paid in 2 installments a year within 3 years.

Is it Mandatory to Pay Property Tax in Turkey?

Yes, it is. Although all real estate owners have to pay property tax, there is a big group that is exempt. Those who have no income, retirees, veterans, widows, orphans of martyrs, and disabled citizens do not pay property tax if they have only one house. They can also get it back.

Furthermore, 2021 November installment payments of the property tax continue.

Is Rental Income Subject to Income Tax in Turkey?

Income Tax in Turkey is continuous, meaning if your income increases, the higher the tax rate will be. The income tax rate in Turkey ranges from 15% to 35%. Nonresidents in turkey are only obliged to pay income tax on all income and earnings earned in Turkey, covering the rental income of my apartment, employment, and business in Turkey. Also, if you’re investing in turkey and gaining interest in the investment, you should pay tax on these too.

Based on your income in Turkey, the tax rate varies as follows

US$1,012 – US$2,530 tax rate is 20%

US$2,530 – US$5,871 tax rate is 27%

US$5,871 and above tax rate is 35%

Types of incomes are categorized below.

  • Income of the rental of the property: A real property income tax is imposed if the individual collecting the rental revenue is a foreign national. If there is no avoidance of a double taxation agreement between Turkey and the country where the owner lives, the property is subject to taxation by the Turkish government because the pay is earned in Turkey. If such a contract or agreement exists, however, the payment will be considered approval of the conditions of the deal.
  • Income of the sale property: Depending on the situation, a foreign natural person’s payment from the sale can be business income or capital gains income; the crucial aspect here is continuity. When a natural person buys and sells frequently, it is considered business revenue and, on the other hand, capital gain income.
  • Property sale income obtained by foreign corporations: The payment will be taxed in the institution’s scope if the limited taxpayer foundation sells real estate in Turkey. As previously stated, the explanations are the same whether the income is commercial or capital gains income. The proceeds from the sale and acquisition of real estate are subject to a 20% corporate income tax.
  • Tax on a rental holiday: The tax on vacation rental property is calculated by removing a percentage for property overheads from total revenue in TL, minus a personal tax allowance. After then, the net amount is taxed at ever-increasing percentage rates. Foreign owners can currently deduct all of their vacation property expenses, including loan interest, from their Turkish income tax bill, but they can offset them in their home country. The country of tax residency if there is a double taxation agreement.

Is not Paying Property Tax in Turkey a Crime?

Yes, it is. Foreign nationals pay taxes for their immovable properties in Turkey. Those who do not pay are tax evaders.

What are the Property Tax Rates in Turkey?

Taxation on individuals – Nonresidents must pay tax on their income earned in Turkey. Married couples pay separate taxes on all sources of revenue.

Monthly Income

 1,500

 6,000

 12,000

Tax Rate

17.91 %

27.91 %

31.46 %

Tax on Income – Income is collected from all sources and taxed at progressive rates.

Income tax 2021 – Other Income

Taxable Income, YTL (USD)

Tax Rate

Up to 24,000 (USD 9,000)

15 %

24,000 – 53,000 (USD 18,667)

20 % on band over USD 9,000

53,000 – 130,000(USD 44,333)

27 % on band over USD 18,667

130,000 – 650,000 (USD 217,667)

35 % on band over USD 44,333

Over 650,000 (USD 217,667)

40 % on all income over USD 217,667

 

Income from rental – Individuals’ net rental income is liable to income tax at progressive rates. However, if the property is rented out as a dwelling, a specific amount is free from taxation. Net rental revenue can be calculated using either the actual deduction technique or the lump sum method.

The actual deduction technique deducts real expenses from gross rental revenue (including lighting, heating, and water expenses; administrative fees, insurance expenditures; tax and duties; interest charges; depreciation costs, and maintenance expenditures). In addition, within five years, 5% of the acquisition cost is also deductible for revenue derived from building leases.

To calculate taxable income, taxpayers use the lump sum technique, which allows them to deduct 25% of their total revenue. However, once a taxpayer has chosen the lump sum option, he may not revert to actual expenses deduction until two years have passed.

Local Turkish property tax rates are calculated based on the value of the property, as shown in the table below.

Property Type

Big Cities Tax

Small Cities Tax

Residential Property

0.2 %

0.1 %

Commercial Property

0.4 %

0.2 %

Farms

0.2 %

0.1 %

Lands

0.6 %

0.3 %

What Does a Property Cost in Turkey?

The most expensive city in Turkey is Istanbul, with an average house price of US$490,000,  US$ 800 per square meter in Q1 2021. Nationwide, the average house price was US$306,000, US$500 per square foot. Sales of main property declined by 15.1% between January and June of this year compared to the same period in 2020, while secondary housing fell by 9.8%.

The ratio of “primary” sales (new structures) to the overall volume of transactions remained virtually constant in the first half of the year, decreasing by a slight 1.3% and totaling 30.3%. However, compared to January-June 2020, the volume of other transaction categories grew by a quarter: + 25.2%. It sold a total of 448,642 real estate units.

In terms of the half-year indication, real estate agencies sold around 190,012 house units in June 2020 and 154,731 in June 2021. Analysts aim to delight everyone interested. Set aside money for purchase charges such as a lawyer, notary, taxes, and related fees in addition to a budget for the accurate price of the property.

Service fees for lawyers and translators might differ depending on who you choose. Other official fees are likewise fixed in the Turkish Lira, and the amount in your local currency will fluctuate based on current exchange rates.

Prices differ based on which lawyer you choose. If you need to locate a lawyer who specializes in buying property in Turkey, look no further.

Most translators charge by the hour, while others provide a fixed package designed particularly for property acquisitions. Please keep in mind that in Turkey, translators must be legally authorized and registered. Each district in Turkey has a notary office which includes a list of licensed and professional translators.

When you make the selling agreement, you must pay 0.948% stamp duty, computed over the agreement’s value.

3% of the purchase price is a standard fee to be paid to the real estate agency.

After signing the title deed, you need to pay 4% property tax.

If you’re purchasing a house for the first time, there’s no need to pay tax (VAT). This is only provided if it’s completed in a foreign currency and not sold for 12 months.

After signing the title deeds, you’ll receive a one-year valid insurance earthquake. The pricing is per square of the property.

Please check this article for more information about the living costs in Turkey.

Is Turkey Properties a Good Investment?

Yes, buying a property in Turkey is a good investment. Almost everyone thinks Turkey, particularly Istanbul, is a good place to invest in real estate. As a result, many foreigners visit Istanbul to buy property and live in Turkey. However, international investors know the difference between a good environment for buying property and a good environment for investing in property.

Several important, relevant, and encouraging aspects influence Turkish real estate investment. First, a long-term investment ensures daily gains. Turkey’s real estate market is booming.

The Investment Citizenship Program is one of the most competitive options accessible globally. For US$400,000, you’ll have a Turkish passport in 3 months. You can also choose from a wide choice of portfolios, from trendy flats to luxurious seaside mansions. When the entire world is suffering issues at various levels, real estate becomes the safest investment kind.

The reasons why having a property in Turkey makes a good investment can be found below.

  • Distinctive and strategic location: It has resulted in an accessible and cost-effective center for major markets, providing convenient connectivity for 1.5 billion people and a combined economy of US$24 trillion throughout Europe, the Middle East, and Central Asia within a 4-hour flying range.
  • Turkey’s infrastructure and economy: The Turkish economy has risen to become one of the world’s 20 most powerful economies because of the Turkish government’s tireless efforts over the last two decades to attain good figures for Turkey in the international arena. As a result, Turkey’s growing economy offers appealing infrastructure investment opportunities in various areas, including transportation, healthcare, and energy. According to the World Bank, Turkey ranked third in worldwide public-private partnership (PPP) projects between 1990 and 2015, with a gross contract amount of US$165 billion. Turkey has also seen an increase in exports, with various products reaching more than 132 countries and a rebound in its tourist industry. More than 50 million people visited there in 2019 alone, making it the world’s fourth-best tourism destination.
  • Turkey’s economy: The Turkish economy ranks seventh among Europe’s major economies, trailing only the largest and most ancient economies, France, Germany, and the United Kingdom. The Turkish economy is one of the most robust in the face of disasters such as the Corona crisis. When compared to other major economies, it demonstrated exceptional strength and stability. Turkey has a solid track record of over 220 PPP deployments across a diverse range of infrastructure projects over the previous decade, with over 80% of these efforts completed. In September 2020, Iranian investors accounted for the most significant number of real estate transactions to foreigners in Turkey, closely followed by Iraqis and Russians.
  • Profitable real estate investment in Turkey: Every year, the value of Turkey’s real estate market doubles. Therefore, investing in Turkey’s fast-growing real estate market yields a desirable return for investors. Real estate is one of the most successful investment vehicles in Turkey, according to data. They obtained a result of 150 percent. As a result, real estate in Turkey is also gaining popularity. Turkey’s real estate offers a high rate of return on investment. A vast number of residential and commercial real estate projects have contributed to these high returns.
  • Turkey is a world-class tourism and entertainment destination: Turkey is one of the most popular tourism destinations for international visitors. This lovely country boasts stunning scenery, attractive beaches, and a plethora of leisure opportunities. Tourists may find malls, popular marketplaces, monuments, parks, squares, stores, passageways, and so on.

How to Get Income from Property in Turkey?

Investing in Turkish real estate to rent it out is a viable option. You may rent a beachfront property in Turkey both short-term (for visitors for at least two weeks) and long-term (for permanent residents, the minimum rent term is six months).

In the first example, the revenue is substantial yet cyclical. In the second instance, the income is moderate but steady.

Long-term rentals – You can rent out your residence for a long time without an agent. So, what causes it? First, both parties must sign and notarize a lease (obtained at any stationery store in Turkey). No Turkish knowledge is required because sworn translators work in the notary’s office. The renter can then utilize this contract to secure a residence permit with the rental unit’s address. Finally, the long-term tenant agrees to pay bills on time (water, electricity, aidat). Locals and foreigners can rent. The monthly rent is due (one month in advance).

Along with the lease, the landlord may want a deposit from the renter (equal to the cost of one or several months of rent). A month or two before the lease expires, the owner will come in and look over everything to make sure it’s secure. The owner deducts the value of damaged objects from the guarantee if the unit needs repairs.

You can also rent out your residence for a short time without an agent.

How to Buy Real Estate in Turkey?

We have listed above the taxes you have to pay after buying real estate in Turkey.

Required documents to buy real estate in Turkey;

  • Identity document or passport (Translation of the passport if necessary)
  • Property expertise report
  • Real estate market value certificate from the municipality
  • Compulsory earthquake insurance (DASK)
  • If the transaction will be carried out with a power of attorney issued abroad, the original and notarized copy of the sworn translation of the power of attorney

If you want to have more information, Realty Group will be your best solution partner. So, Realty Group will enable you to make your home purchases in no time! You can buy a house or find an affordable one in every province of Turkey. When you buy real estate worth $400,000 at least, you can acquire citizenship for yourself and your family.

Why are Houses in Turkey so Cheap?

People from all over the world ask us why property in Turkey is so cheap. To answer what to do with a US$40,000 – US$50,000 apartment we must first recognize that numerous regional Turkish property markets are booming with luxury homes. So, if you want the cheap property, look at localities rather than the whole country.

Istanbul’s Bosphorus palaces, for example, are among the world’s priciest. One sold for US$155 million. On the Bodrum peninsula, Yalikavak is a popular destination for the Saudi royal family, celebrities, and wealthy businessmen, with properties priced up to US$4 million. So, in this piece, we will examine low-cost property places and features that make homes a global value.

2023 Vision Plan Turkey’s property market was in shambles 20 years ago. Because mortgages were unavailable, many families had many generations living together. No progress, no modernity. Poor housing quality due to chaotic regulations and rules. There are also many unauthorized zones in big cities like Istanbul and Izmir. A property back then cost roughly US$5,000, but there were few buyers.

The Turkish government then launched the 2023 Vision Plan. The ambitious goal was to make Turkey’s economy one of the world’s best, comparable to the US and the UK. This plan featured a comprehensive housing policy for Turkey.

Initial public offering of mortgages by banks. Second, they passed laws allowing foreigners to buy property. Finally, they asked developers and builders to launch new, modern housing projects to replace old, worn-out structures. The fact that Turkey’s housing market is still young explains why the property is so cheap.

Demand and Supply The 2023 vision plan offered a supply and demand business paradigm. In the housing market, this refers to the number of available homes vs the number of prospective buyers and sellers. In regions like Didim and Altinkum, where development land and unoccupied homes are plentiful, the cost per square meter is low. Because the market changes, they get the best return if they own the property for a long time.

The European Istanbul fringes are a great example. Buyukcekmece and Kucukcekmece have seen massive growth. The new Istanbul Airport has improved property values, and houses in Istanbul while the proposed Istanbul canal route has enticed investors. However, abandoned homes and vacant land are scarce in some areas, driving up costs.

The following expenses are other factors that prove why Turkey is so cheap.

  • Household expenses, operating costs, and upkeep are all low
  • Purchase charges such as notary fees, interpreters, and taxes are low
  • Furniture at a low cost
  • Living costs are low, especially when compared to locations like Spain

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