Property Taxes in Türkiye and Tax Exemption Conditions

Real Estate (Property) Taxes in Türkiye

Investors are always interested in property taxes in Türkiye when they make a real estate investment in one of Türkiye's cities.

This corresponds with the increasing growth in the real estate field in the country after offering many advantages that have contributed to attracting investors from different countries of the world.

The Turkish government also offers a wide range of facilities, whether in taxes or procedures. Here, we will talk address property taxes in Türkiye.

Property taxes are the sums of money that are payable when transferring real estate ownership from one person to another, with many ways through which real estate ownership is transferred such as sale, gift, inheritance, and others.

Also, the value of taxes often varies according to the value of the property, and the property owner pays these taxes in Türkiye according to the dates set as due dates for the authorities.

Dates for Property Tax Payment in Türkiye

Property taxes in Türkiye are usually paid according to the tax law, which takes place in two payments, with each payment being equal to the other during a period of a year.

The first installment is paid during the months of March, April, and May; while the second installment must be paid during the month of November of the same year; in addition to some cases for which the property tax is exempted.

Types of Property Taxes in Türkiye

There are many types of property taxes in the country, and this is in light of the diversity of the real estate field; especially, at a time when investors are interested in knowing these taxes and their due dates. These types are:

1. Title deed transfer tax: This tax is paid once when carrying out the title deed transaction and is paid to the General Directorate specialized in land and real estate registry. Also, the tax law indicates that the buyer and seller must pay 2% of the sold property's value.
2.  Rental income tax: When renting a property in Türkiye, a tax must be paid. The rate of such a tax depends mainly on the rental price of the property. At the end of March of each year, real estate owners must declare their revenues to the tax office. Also, there is a set of criteria on the basis of which annual rents are calculated.
3. Real estate profit tax: In the event that the property is sold in the first 5 years of its purchase, the profit tax allocated to the tax office must be paid. The tax in this case is based on the difference between the sale value and the purchase value. The tax rate here is 15% of the amount after calculating the annual inflation; as inflation reduces the money value.
4. Annual property tax: This annual property tax is generally paid to the municipality. This type of tax varies according to the city in which the property is located and is paid annually. It is also possible to enjoy the advantage of automatic bill payment through the bank.
5. Inheritance tax: After inheriting a property in Türkiye, its owners must pay the allocated taxes. Here, the rate of this tax is based on the inheritance's value.
6. Gift Tax: If a person receives real estate from another person as a gift, this person must pay the tax on this gift. In the event that this gift was presented by a family member, it can be reduced by up to 50%. Also, the rate of these taxes depends on the property value.
7. Value Added Tax (VAT): If the property belongs to a company, a paid invoice must be available when selling it. In the event that the property's owner is a person, this means that no added tax is required because the person purchasing the property has already paid this tax.

 

Tax Exempt for Citizens and Payment Delay Fines in Türkiye

People who own more than one property cannot benefit from tax exemption; while relatives of martyrs, disabled, unemployed, and retiree individuals benefit from the tax exemption if the specific conditions are met. As for the other cases, the property tax must be paid by the real estate owners. As in the case of other taxes, some penal measures are applied in the event of default, which can be a fine added in the first stage for late payment at a certain rate, which is 1.4% of the total tax value.

In the event of more delay, this fine remains and doubles for each year in which payment is not made; the law stipulates that this tax is not subject to cancellation in the event of time accumulation on it, as the matter is transferred to the judiciary for a decision.

Conditions for Tax Exempt for Foreigners

Law No. 6824 included all legal articles related to the field of real estate investment in the country, and Article No. 7 of the Tax Exemption Law stipulated some conditions for obtaining exemption when buying a property, namely:

• The building must be new. However, for previously occupied properties, they are not included in the tax exemptions, yet, if the property was sold again, an exemption can be obtained in case all the previous owners of the property are Turkish.
• Paying the property's value in foreign currencies other than Turkish to strengthen the pillars of the Turkish economy.
• The owner is not entitled to change his/her ownership and resell it before one year has passed since the purchase if the tax exemption law is applied.
• Foreigners residing outside the country who hold residence permits from foreign countries or institutions without a legal residence address are exempt from taxes.
• As for foreigners residing in the country or institutions that have a place of work or a source of financial support, they are not entitled to benefit from tax exemption.
• Residential or commercial real estate is the real estate included in the tax exemption law (buildings, residential complexes, and licensed commercial units). As for lands and farms, this law does not apply to them.

Obtaining Tax Exempt

Those exempt from the property tax should go to the Tabu Department in the municipality to which the property belongs and apply for tax exemption.

They can recover what they paid previously as a property tax when they prove their exemption eligibility. Therefore, these funds can be recovered within 5 years from submission of the exemption request.

Documents Needed for Tax Exempt

A tax exemption request can be submitted to the VAT Department. Therefore, the tax exemption application must include these documents:

• A bank receipt proving that the money has been transferred from outside of Türkiye to one of its banks, or an official paper proving that the money entered through a Turkish airport; provided that these amounts are in either US dollars or euros.
• A paper proving residence outside the country by presenting an officially certified private address outside the country.
• Visit the Immigration Department to obtain a paper proving that you have not resided in the country for a period of 6 months.
• Visit the Public Security Directorate to obtain a paper showing the movement of entry and exit to and from Türkiye.

 

Tax Exempt Certificate

After securing all the required documents and papers, the person fulfills the conditions and follows all the necessary steps to benefit from the tax exemption, they must then apply to the Turkish tax authorities to get a tax exemption certificate.

 

Therefore, as the Homeland Real Estate Company team, we are ready to provide free real estate consultations to fulfill your desire to own a distinguished property. Do not hesitate to contact us at +905377793006.

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