Before starting your real estate investment | Knowing all about real estate taxes in Turkey

Real estate taxes in Turkey are one of the most important issues that real estate investors, as well as future investors who are planning to invest in real estate in Turkey, must be aware of before making the purchase decision.

What distinguishes the tax system in Turkey is the equality of foreigner investors with Turkish citizens in the amount of the tax they pay, in order to encourage foreign investment within the country. In fact, the Turkish parliament has issued a decree cancelling any increase on tax amount applied on foreigner investors.

What are Real Estate Taxes in Turkey?

The taxes imposed by the Turkish law, on all forms of investment in real estate, are fees incurred by both the seller and the buyer, that is, the parties involved in the real estate transactions.

The real estate tax is paid to the Tax Payment Department in Turkey, when any sale or purchase of real estate on Turkish territory is executed.

Types of taxes in Turkey

There are many types of taxes in Turkey, being an economic country based on the service sector to a large extent. Of course, real estate investments come first on top of these services.

Turkey is one of the most wonderful countries for tourism. It is visited by large numbers of tourists and business owners for reasons related to tourism as well, such as medical tourism for hair transplantation, aesthetics surgery, and various other reasons.

First – Property Taxes Paid Once Only

Value-Added Tax on Real Estate in Turkey

This type of real estate tax in Turkey depends on the type of property invested, as well as the geographical area in which it is located, whether in the countryside, small city, or in big Turkish cities. Furthermore, it is related to the average price per square meter for the property in this region. In addition to the area of the property and the construction pace.

The added-value tax on real estate in Turkey ranges between 1% (within the areas in which the state encourages urban development and aims to develop it), to reach up to 18% in some high-end and commercial neighborhoods in major cities such as Istanbul, Turkey’s economic capital.

This tax is collected on properties that are sold for the first time, and is included in the price of the property. It is paid once by the company that developed the property.

Property Transfer Tax | Title Deed’s Tax in Turkey

In case the owner of the property needs to transfer the ownership of his property to other people, due to sale or otherwise, he will pay property ownership transfer tax to issue a title deed in the name of the new buyer. This tax is equivalent to 4% of the declared value of the property specified earlier in advance. Both the seller and the buyer incur it equally, however sometimes it is incurred by the buyer only if this condition was stated in the agreed contract.

Second – Annual Real Estate Taxes

Earthquake Insurance Tax in Turkey

It is an annually paid tax as the property owner insures against earthquakes. There are two types of insurance; compulsory and non-compulsory, depending on the type of property whether it is in a residential or commercial construction project. It is also contingent to the type of insurance coverage required.

Real Estate Profits Tax in Turkey

This tax is imposed when reselling any property in Turkey. It is also known as the income tax.

It is paid only if the sale is completed within the first 5 years from the date of purchasing the property.

The profit is calculated on the basis of the difference between the value specified in the title deed, with which it was purchased, and its price upon sale.

Its percentage depends on the selling price, and if it is not more than 6000 Turkish liras, the tax value will be up to 20%.!! This tax is estimated by the State Land Registry Department.

Calculation of the Annual Tax on Real Estate in Turkey

The annual tax value for real estate in Turkey is calculated based on the declared value upon purchase, which is determined by the title deed (Tapu), as per the following segments:

Residential real estate: 0.1%.
Commercial real estate: 0.4%.
Land with permission to build commercial buildings: 0.6%.
Agricultural land: 0.2%.

During the first four years of the property purchase date, the average tax for residential apartments in Turkey is around $ 50 to $ 60 US dollars annually.

While the average tax for villas in Turkey is around $ 100 US Dollars per year.

However, Turkish citizens buyers are exempted from paying the annual tax on real estate in Turkey. While foreign real estate owners who do not hold Turkish citizenship have not been exempt from this tax up to this date.

Third – Monthly Real Estate Taxes in Turkey

Monthly real estate tax is a fee paid by the owner of the property, or whoever occupies it from tenants or others, to the administration responsible for the affairs of the residential compound or construction, and it is known as the revenues in Turkey.

They are calculated at approximately $ 21 per square meter of property. These fees are in return of shared services that property owners enjoy within the residential or commercial compound, such as planting gardens, swimming pool services, playgrounds, cleaning services, maintenance, lighting, security, and other welfare services, such as health clubs, event halls, and others.

It is worth noting that these monthly fees vary from one region to another, and from one residential compound to another. In addition to the fact that some apartments within regular buildings require paying revenues for cleaning services and elevator maintenance, but they are relatively low and usually less than the revenues of luxurious compounds.

How to Pay Real Estate Taxes

Real estate owners in Turkey are advised to open bank accounts in Turkish banks, to facilitate payment of all taxes and monthly payments owed on the property, and to officially prove the payment of these fees.

Foreign investors in Turkey can also seek the help of a real estate consultancy and property management company in Turkey, to handle this follow-up process.

It is worth noting that these fees can be paid through some government applications, which are designated by the Turkish state in order to facilitate payment procedures.

Penalties for delaying real estate tax payment in Turkey

A delay penalty is imposed on real estate owners if they are late in paying real estate taxes on the specified dates. This is represented in paying a financial penalty of reasonable rates at an early stage.

In the event of long delays in payment, this penalty will increase significantly on annual basis. At times, such long-term delays may be raised before the Turkish judiciary courts for settlement.

The aforementioned was a comprehensive presentation on the subject of real estate taxes in Turkey, presented to you by Properties Gate – the real estate portal in Turkey. We are pleased to receive your inquiries regarding any of these taxes, and we can also assist you throughout the whole processes of paying real estate taxes, and managing your properties in Turkey.

Source: Sabah Newspaper

Blog