Information about Property Tax in Turkey

• Introduction to the Property Tax in Turkey

  • The Annual Real Estate Tax in Turkey

  • What is the property tax in Turkey for foreigners?

    • Exemption from Property Tax in Turkey

Introduction to the Property Tax in Turkey

The owners for Property in Turkey are required to pay certain fees and taxes on time, and property tax is one of these taxes. The real property tax is paid by the real owner of the property or the beneficiary of the property. In the absence of these individuals, the property tax is paid by the owner of the right to dispose of the property.

The real estate tax is imposed on properties located within the Turkish border and is taken by calculating the tax rate from the prevailing price of the property and is paid to the concerned parties at certain times of the year. Each year, the tax calendar determines the dates of payment of taxes for that year. According to the tax assessment issued in 2016, the dates of payment of property tax in this year is as follows:

• First Installment: Starts from the beginning of March and lasts till the end of the official working day on May 31st.

• Second installment: starting from the beginning of September and continuing to the end of the official working day of the 30th of October.

Related: Understanding Pre-emption Rights in Turkish Real Estate.

The Annual Real Estate Tax in Turkey

The real estate tax is paid by paying the municipality that the property is located within its administrative borders. If the property to be paid is located outside the city and the municipality concerned does not operate the electronic system, the tax can be paid by a money transfer through the Ptt. Provided that the number of the real estate taxpayer is stated.

Many foreign investors wonder whether they are subject to the real estate tax law or not. It can be said that foreign investors who own property rights in Turkey are subject to the laws that landlords are subject to in Turkey, so they are subject to the real property tax that is subject to realtors in Turkey.

However, according to the Turkish Real Estate Tax Law, buildings and real estate belonging to foreign countries or representatives of international organizations in Turkey are exempted from real estate taxes, which are used as an embassy, consulate, international institution or the like (subject to reciprocity).

What is the property tax in Turkey for foreigners?

Property tax in Turkey for foreigners is generally the same as for Turkish citizens, and includes several key charges: a title deed transfer tax of 4% of the declared property price (paid upon purchase), an annual property tax ranging from 0.1% to 0.6% depending on the property type and location, and VAT (1%, 8%, or 18%) applied mainly to new properties purchased from developers. 

If you sell the property within five years, you’ll pay capital gains tax on the profit, while sales after five years are tax-exempt. Rental income is also taxable under Turkey’s progressive income tax system, with rates from 15% to 40%. In addition, all owners must have compulsory earthquake insurance (DASK). 

Overall, foreigners should budget an additional 4–6% of the property’s price to cover taxes and purchase fees.

Exemption from Property Tax in Turkey

According to the Property Tax Law No. 1319, the real estate tax is paid for every property located within the Turkish borders. There are also exemptions that include taxpayers. While some individuals are exempt from paying taxes in full, some are exempted from individuals for the payment of a specified portion of the tax and for a specified period of time. Individuals who are exempt from paying a specific part of the tax for a specified period are buyers of the newly built real estate. Anyone purchasing a residential unit within a newly constructed building is exempt from paying a specific part of the real estate tax about the housing unit concerned 5 years from the date of acquisition. This exemption is called "temporary exemption", where the tax is deducted from 25% of the taxable value of the property concerned. The property tax is calculated as 75% of the remaining value subject to real property tax.

For example, to say that Mr. Ahmed bought a housing unit on 2015.01.01, from a building, which was completed on 124.01.01, and the taxable value of the housing unit is 200.000 lira. In this case, Mr. Ahmed benefits from the "temporary exemption" A specific portion of the tax during the period 2017-2021, where 50.000 lira of taxable value of the property is deducted, and the property tax is calculated for the remaining 150.000 lira only.