Last Updated on 06/03/2023
Turkey property tax is a very essential topic and one of the most important issues foreigners must investigate before buying a property in Turkey. This would help them to estimate their budget before starting the purchase process.
Here is an ultimate guide to the main taxes and fees related to real estate investment in Turkey.
Types of Turkey Property Tax
One-Time Tax
VAT
VAT or value-added Tax is one of the main Turkey property taxes that buyers should take into consideration. Yet. it varies according to the property type and area.
In fact, commercial properties are subject to an 18% VAT; nevertheless, residential properties are subject to a different tax. Here are two instances: Apartments larger than 150 square meters are subject to an 18% VAT charge.
While apartments under 150 square meters are subject to 1% VAT.
It’s crucial to know that in Turkey, rental properties are not subject to VAT. The same benefit applies to people who sell their homes on their own, but when real estate companies are involved in the sale or purchase, the situation is different. The VAT rate in this case is 1%.
We highly encourage you to consult reliable experts to learn more about the taxes placed on the real estate industry. You can get in touch with MEO Consultants who would provide you with appropriate assistance.
Purchasing Tax
When you purchase a property in Turkey, you receive a title deed, known as a “Tapu” in Turkish, along with a charge equal to 4% of the purchase price. The buyer and seller often split this cost in half and pay it. You might, however, be compelled to pay the entire amount as the buyer, or vice versa, depending on the terms of the two parties’ agreement.
Inheritance Tax
A tax of one percent to thirty percent will be due if you get a property through an inheritance or donation. These taxes may be paid over a three-year period in two installments.
Depending on the method of passing forward the bequest, Turkey’s inheritance tax ranges from 1% to 30%. According to Turkish law, foreigners who inherit real estate held in Turkey are required to pay inheritance and transfer taxes. It’s crucial to be aware that there are instances where the properties are transferred as gifts or donations, in which case no tax is levied.
Periodic Turkey Property Tax
Annual Property Tax
Real estate buyers, both locals and foreigners must pay a yearly tax to the Turkish government.
The annual Turkey property tax varies depending on the size of the city and the type of property. In Istanbul, for instance, the annual property is 0.2% of the value of the home.
- Residential Buildings: 0.2% in metropolitan cities and 0.1% in small cities.
- Commercial Buildings: 0.4% in metropolitan cities and 0.2% in small cities.
- Farms: 0.2% in big cities and 0.1% in small cities
- Lands 0.6% in metropolises and 0.3% in small cities
DASK Insurance
It is a yearly payment as insurance against earthquakes and other natural calamities. It is roughly comparable to two dollars per square meter, according to estimates. For instance, if a home has 100 square meters of space, the annual earthquake insurance value is roughly similar to $200 US.
Income Tax
Keep in mind that property owners in Turkey must pay income tax if they choose to rent out their property. The same rules apply if they decide to sell it. Yet, no income taxes will be due after 5 years of ownership.
How to pay Annual Property Tax in Turkey
Depending on the type of property and the location where it is located, Turkey’s property tax rates range from 0.1% to 0.6%. As a result, a 0.2% rate tax is imposed on commonplace properties like apartments or buildings close to major cities. The annual property tax rate for properties owned in large municipalities is 0.4%. Turkey levies a 0.2% annual property tax on homes in major cities, compared to a 0.1% annual tax on homes in the neighborhood.
Turkish taxation of commercial premises is 0.4%, whereas that of land is 0.6%. We would like to remind you that the cost of the property determines these tariffs.
In Turkey, there are two ways to pay property taxes: either in person by paying the whole amount at the municipality or online using the municipality’s official website.
Turkey Income Tax Calculator
Remember that you will owe income tax if you choose to rent out your property. The amount of the tax depends on the income amount and can be determined as follow:
- For income up to 24,000 TL, the tax is 3,600TL
- For income between 24,000 and 53,000 TL, the tax is 20%.
- Up to 130,000 TL: The tax rate is 9.4% for the first 53,000 TL of income and 27% for the remaining amount.
- Up to 650,000 TL: The tax rate is 30% for the first 130,000 TL of income and 35% for the remaining amount.
- Above 650,000 TL: The tax on the first 650,000 of income is 212,190 TL; the remaining amount is subject to a 40% penalty.
Common Turkey Property Tax FAQs
Is there any property tax in turkey?
According to the Land Registration and Cadastre Directorate, the overall amount of tax owing to Turkish authorities is equal to 4% of the land value. Often, the land value is less than the selling price of the property. According to Turkish legislation, the seller must pay 2% tax and the buyer must pay 2% tax, unless the parties agree otherwise.
Do foreigners pay property taxes in Turkey?
Foreign investors in Turkey owe taxes, and they are paid on a regular basis during designated times of the year. Likewise, all property buyers both locals and foreigners must pay property taxes.
How do I pay property taxes in Turkey?
In Turkey, there are two options for paying property taxes: visiting the municipality and paying the lump sum in person, or paying online using the municipality’s official website.
