Property Taxes in Turkey
Real estate investment in Turkey, which brings many benefits such as foreign investor incentives, Republic of Turkey citizenship and VAT exemption, has recently attracted the attention of many foreign investors. Individuals and institutions buying real estate within the borders of the Republic of Turkey start making profits in a short time by taking advantage of Turkey's development opportunities.
There are also some taxes that people who buy property in Turkey have to pay. Title Deed Tax, Real Estate Rental Income Tax, Real Estate Appreciation Tax, Annual Real Estate Tax, Inheritance Tax, Gift Property Tax, and Value Added Tax are among the taxes paid by individuals who own real estate. Property owners have to pay these taxes under certain conditions and at certain intervals.
WHAT IS ORIGIN TAX?
When real estate in Turkey changes hands, the tax that needs to be paid only once is called Real Estate Transfer Tax. The land registry transfer tax is paid at the time of the transfer of the title deed at the Land Registry and Cadastre Office. Both buyers and sellers must pay 2 percent of the purchase price of the property (4 percent in total). Although people buying property in Turkey tend to make this payment in general, it is recommended that the buyer and seller come to an agreement on the subject before the transfer.
WHAT IS INCOME TAX FROM THE RENTAL OF REAL ESTATE?
If a real estate owner rents out his property, he has to pay tax on the rental income generated. Income tax from the rental of real estate varies depending on the rental price of the rented property.
If the annual rental income from the property is less than 18,000 TL, 15 percent of the total price is paid as tax. If the income from the property is between 18,000 TL and 40,000 TL, the property owner has to pay 20 percent tax. If the income from the property is between 40,000 TL and 98,000 TL, 27 percent tax must be paid. If the property owner's income is between 98,000 TL and 500,000 TL, he has to pay 40 percent tax.
The calculation can be performed as follows, for example. If a person earns 18,000 TL annual income from their property, 2,000 700 TL, if 22,000 TL income is 4,000 400 TL, if 58,000 TL income is 15,000 660 TL, if 82,000 TL is earned, 28,000 TL 700 TL The property pays rental income tax. In other words, people who earn 180,000 TL annually from their properties should pay 51,000 460 TL in taxes.
When you buy a property that can be used commercially, there is a withholding tax to be paid on the property you are renting. If you sign a contract that fully explains the rental agreement, the renter must pay the withholding on behalf of the owner. This means that 45 thousand TL of the 51 thousand 460 TL tax that the property owner has to pay will be paid by the tenant. In this case, property owners only have to pay 6,000 460 TL taxes.
PROPERTY VALUE INCREASED INCOME TAX
Property buyers have to pay taxes if they decide to sell the property they have bought within 5 years. This tax is paid on the profit made by the person between the purchase and sale amount. After the annual increase in inflation, 15 percent is charged on the amount earned and this fee is deducted as tax. The profit must be declared by the next March after the sale of the property. After this declaration, the calculation is made and the amount of tax that the individuals have to pay is determined.
The following example can be given for real estate gains tax:
If a person buys a property for 100,000 TL and sells it for 200,000 TL after 2 years, the inflation rate between the 2 years is calculated. For example, if we say 58 percent to the calculated inflation rate, 58,000 TL is tax-free. The remaining 42,000 TL are considered winnings. Property transfer tax, mortgage interest and 4-year property tax cost 22,000 TL. A portion of 22,000 TL will be deducted from 42,000 TL. The remaining net profit is 20,000 TL and 15 percent of this amount equals 3,000 TL. Since the person sold the property he bought 2 years ago for 100,000 TL for 200,000 TL, he pays a total of 3,000 TL as property value gain tax.
ANNUAL PROPERTY TAX
One of the taxes that property owners typically have to pay is the annual property tax. The annual property tax varies depending on whether the building is within metropolitan boundaries and what type it is. The property tax, which has to be paid twice a year, is twice as high for buildings in metropolitan areas as outside of metropolitan areas.
If a residence is within metropolitan limits, 0.2 percent property tax is paid, and if it is outside metropolitan limits, 0.1 percent property tax is paid. If the trade structure is within the metropolitan limits, 0.4 percent tax is paid, and if it is outside the metropolitan limits, 0.2 percent tax is paid. If the country is within the metropolitan limits, 0.2 percent tax is paid, and if it is outside the metropolitan limits, 0.1 percent tax is payable. If the country is within metropolitan limits, 0.6 percent tax is paid, and if it is outside metropolitan limits, 0.3 percent tax is paid.
inheritance tax
When people inherit property, they have to pay taxes on it. If the value of the inheritance is up to 160,000 TL, 1 percent tax, if it is between 160,000 TL and 510,000 TL, 3 percent tax, if between 510,000 TL and 1 million 280,000 TL, 5 percent tax, if 1 million 280,000 TL and 2 Million 780,000 TL, 7 percent tax if it is over 2 million 780,000 TL, 10 percent tax.
GIFT REAL ESTATE TAX
When donating real estate, gift tax is payable. If the donated assets come from a spouse, a parent and a child, the tax can be reduced by 50 percent.
If the value of the gifted building is 160,000 TL, 10% tax, if it is between 160,000 TL and 510,000 TL, 15 percent tax, if it is between 510,000 TL and 1 million, 280,000 TL, 20 percent tax, at 1 million 280 thousand TL and 2 million TL If it is between 780 thousand TL, 25 percent tax has to be paid, if it is over 2 million 780 thousand TL, 30 percent tax has to be paid.
VALUE ADDED TAX
If the company sells a property, an invoice must be issued for this sale. If the owner of the property is a natural person, no VAT will be paid on purchase, as the VAT associated with this property is also paid on the first purchase.
The current market value of the property is taken into account for value added tax. If the real estate type is residential, if the aria is less than 100 TL and the area is less than 150 square meters, or if it is included in the urban transformation project and its net area is less than 150 square meters, 1 percent VAT is paid. If the current market value of the land is between TL thousand and TL 2 thousand and its net size is less than 150 square meters, 8 percent tax is payable. If the current market value of the land is more than 2,000 TL or its net size is more than 150 square meters, 18 percent VAT will be paid.
If the type of property is commercial or land and the property is owned by the company, 18 percent tax is payable.
AVOID DOUBLE TAXATION WHEN BUYING PROPERTY
When buying real estate, efforts are made to avoid double taxation, so that people who are going to buy a property do not pay taxes both in their country and in the country of purchase. There are many countries that have double tax treaties with Turkey.
The following countries have double taxation agreements with Turkey:
USA, Denmark, Ireland, Lebanon, Serbia, Germany, Indonesia, Spain, Luxembourg, Singapore, Albania, Estonia, Israel, Hungary, Slovakia, Australia, Ethiopia, Sweden, Macedonia, Slovenia, Austria, Morocco, Switzerland, Malaysia, Sudan, Azerbaijan, Philippines, Italy, Malta, Syria, UAE, Finland, Japan, Mexico, Saudi Arabia, Bahrain, France, TRNC, Egypt, Tajikistan, Bangladesh, Gambia, Canada, Mongolia, Thailand, Belgium, South Africa, Montenegro, Moldova, Tunisia, Belarus, South Korea, Qatar, Norway, Turkmenistan, Bosnia and Herzegovina, Georgia, Kazakhstan, Uzbekistan, Ukraine, Brazil, Croatia, Kyrgyzstan, Pakistan, Oman, Bulgaria, India, Kosovo, Poland, Jordan, Algeria, Netherlands, Kuwait, Portugal, Vietnam, Czech Republic, England, Latvia, Romania, Yemen, China, Iran, Lithuania, Russia, New Zealand, Greece.
WITH 2 CLİCKS WE ARE READY TO SERVE YOU
As 2 Clicks, one of the leading companies managing the property buying process in Turkey, we answer all the questions that foreigners have about the property they want to buy and prevent potential problems. You can also contact us to benefit from the services we offer and after the meeting you can find answers to your questions.
Türkmen Mahallesi, Saçıkara Sokak, B-Block NO. 21 B, Kuşadası-Aydın, Turkey. You can reach our company based in Turkey on phone number +90 (544) 443 46 24 and quick call via WhatsApp. You can send an email to 2Clicks.io via [email protected] and get detailed information about our work.
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