A Comprehensive Guide for Paying Property Tax in Turkey

A Comprehensive Guide for Paying Property Tax in Turkey

Turkey’s tax legislation has clear, harmonized, and persistent provisions that conform to international standards and guidelines. According to Article 8 and Article 18 of the Real Estate Tax Law which came into effect in 1970, predefined taxes are applicable for property owners in Turkey, whether they are citizens or foreigners.

 

Along with the fact that real estate rates in Turkey are comparatively lower in comparison to the European nations, the procedures for buying properties and paying taxes are also relatively easier to manage. 

 

Real estate investment in Turkey

 

In 2012, the Turkish government permitted foreign investors to buy properties in Turkey that were subjected to national inheritance laws. Foreign property owners were granted the rights to have a residency permit for themselves and their families. In addition, if the property owned by the foreign investor is equal to $250,000, they are entitled to Turkish citizenship.

 

Nonetheless, real estate laws and investment regulations were formulated to ease the property buying experience of international investors. 

 

Documents required to pay property tax in Turkey

 

  • Turkish tax number
  • A notarized and translated copy of the passport
  • Property evaluation report
  • 4 biometric personal photographs

 

Title deed fee

 

Before culminating the purchase at the title deed registry, property owners are required to pay the Title Deed Fee. It is calculated on all transactions including buying and selling real estate, annotations of all transactions made at the registry, and registration of the rental contract. Both property buyers and sellers are individually subjected to a 2% tax (a total of 4%) over the sales price that is payable at the tax office. 

 

Value Added Tax (VAT)

 

Tax laws in Turkey state that all industrial, commercial, and professional transactions made in the country are liable for VAT or KDV in Turkish. However, it can be exempted under the following circumstances:

 

  • The first property for each international investor is exempted from VAT provided that they previously shouldn’t own any residency in Turkey. 
  • If the property seller is a company (not in the real estate trading industry) and has held the property for more than two years
  • If the owner/seller of the property does not deal with any commercial activities.

 

For commercial properties

 

Offices, workspaces, and other commercial properties are liable to pay a VAT of 18% in all scenarios.

 

For residential properties

 

Rates vary from 1 to 8% depending on the specifications and size of the residential property in Turkey

 

  • 1% VAT is levied on apartments with a net area less than 150 square meters
  • 18% VAT is levied on apartments with a net area more than 150 square meters

 

Apart from these charges, a new law was passed by the Turkish government in 2013 that modified the VAT charges for apartments with a land area less than 150 square meters. If the permission for the building was granted after 2013 for a residential project, additional rates were applied depending on the total value of the land of the property.

 

  • If the land of the residential project is 500TL/square metres and less, 1% VAT is requested.
  • If the land of the residential project is between 500TL/square metres and 1000TL/square metres, 8% VAT is applicable.
  • If the land of the residential project is more than 1000TL/square metres, 18% VAT is requested.

 

Stamp Duty 

The sale agreement of a property in Turkey is subjected to 0.948% stamp duty over the highest monetary value referred to or stated in the agreement. On the other hand, leasing agreements are subjected to a stamp duty of 0.189%. In this case, both sellers and buyers are held mutually responsible for the payment of the stamp duty. 

 

Note: Stamp duty is applicable only for the notarized “promise to sell” contracts and usually for properties that are under construction. In case the title deed is ready, only the title deed tax is levied and the stamp duty is not applicable or is set at 0%.

 

Yearly Property Tax

 

An annual property tax is levied on the property that is payable at the tax office and should be paid before May each year. Taxes are calculated on the basis of property type, big and small cities, and category. Contribution to the Conservation of Immovable Cultural Property is applicable at the rate of 10% of the real estate tax. 

 

 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%

 

An Overview of Property Tax in Turkey

 

Property tax can be paid in two instalments every year. The first instalment is paid begins on March 1 and ends on May 31. The payment for the second instalment can be made in the month of November. However, it is also possible to pay both the instalments in one go. 

 

 Taxes when Buying Property in Turkey Property Price Percentage
 Property Registration Tax (Split between buyer and seller since 2018)  2% each 

 (a total of 4%)

 Annual Property Tax 0.1-0.6% 
 Stamp duty 0.15-0.75%
 Insurance Based on the size of the property 
 Agency Fee 0.3%

 

Final thoughts

 

The real estate market in Turkey took the tests of time post-pandemic and preserved its growth amid economic turbulences. Foreign investors are lured towards its international appeal, real estate development, and multicultural communities. With simplified tax regulations and laws, Turkey offers remunerative opportunities to Turkish and foreign property buyers for purchasing lands, apartments, and villas at attractive prices. 

 

For more information on commercial and residential property tax in Turkey, consult our seasoned real estate experts and legal executives at Extra Property here.

 

Sources: GlobalPropertyGuide, invest.gov.tr

 

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