Property Taxes in Turkey
Purchasing Tax (Title Deed Tax):
When a real estate deal is completed, buyers in Turkey are required to pay an initial stamp duty or transfer tax, also referred to as the title deed charge. According to the local Land Registry and Cadastre directorate, 4% of the land value is the total tax owing to the Turkish government. Often, the land value is less than the selling price of the property. According to Turkish legislation, unless both parties agree otherwise, the seller and buyer each pay 2% of the total transaction price. This means that there is usually room for bargaining because the seller will occasionally demand payment of both tax amounts from the buyer.
VAT (Value Added Tax):
When purchasing a brand-new apartment through a developer, VAT must be paid to the government upon delivery of the building. The purchase price that is being offered typically includes this VAT.
For Commercial Properties the VAT will be 18% in all scenerios.
For Residential Properties it changes from 1% to 18%.
Apartments having a net size of less than 150 m2 will be subject to a 1% VAT charge.
Apartments having a net size greater than 150 m2 will be subject to an 18% VAT charge.
The government’s position is that individuals who can afford to purchase a very large residential flat should pay a higher tax rate of 18%.
If the residential project’s land area is 500 Turkish Liras per square meter or less, the same 1% VAT request is made.
If the residential project’s land area falls between 500 and 1000 Turkish Liras per square meter, 8% VAT is required.
If the residential project’s land is more than 1000TL/m2, 18% VAT is required.
Yearly Property Tax:
The two installments for yearly property taxes are due in May and November. Residential property owners are required to pay either 0.1% or 0.2% of the property value each year, depending on whether the property is in a rural or urban region. As a result, the tax on a property in the city of Izmir will be twice as much as the tax on a rural property in the province of Izmir.
When purchasing a private dwelling with a gross area of less than 200 square meters, buyers may be excluded from paying the annual property tax as long as they have no sources of income in Turkey (with the exception of pension income) and no other real estate holdings there. Before moving through with the purchase, it is wise to confirm that a property is eligible for this exemption with a local financial expert.
The annual property tax is not due until the first calendar year following the date of purchase in Turkey since the seller is required to pay the full year’s property tax up front before the property can be sold. For instance, if the buyer buys a house in Izmir in April 2022, the sale cannot be finalized until the seller pays the taxes due in May 2022 and November 2022 in advance. The first tax installment for the buyer is due in May 2023. Taxes may be paid online or at the neighborhood council offices.Tax on rental income: If the buyer decides to lease the property while not living there, additional taxes on rental income may be required. Taxes on rental income are often quite cheap for the first ten years because a portion of the sale price and the cost of any improvements or repairs can be deducted as expenses.
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