Real estate taxation in Turkey: the amount, the payment, and the procedure:


The taxation issue is a primer matter to investigate for any savvy investor; it's considered a core matter for any business, especially when the real estate property is seen as an investment by renting or doing the resale for the property.
Meanwhile, we should consider taxation as an Initial block within the journey of searching for the perfect property in the ideal country where the TAXES is working for the investors, not against them.

Actually, the Turkish economy is built on taxation; like any surrounding country in Europe, basically, you have to consider various kinds of TAXES. There's an annual TAX kind, monthly TAX, and There's the TAX which you pay only for one time on the property and mostly paid to the government, not to any private sector.

Therefore today we are telling you about the different sorts of taxation in detail, which you should take into consideration, will afford you more knowledge about, the amount, the payment and the procedure:

What are the sorts of property taxes in Turkey?
First, we should focus on the concept that the taxes on real estate properties in Turkey
are calculated on the total amount of the property's value.

The annual taxation of property in Turkey:
Annual payment to a government entity (vergi dairesi):

The Taxes' value depends on the sort of property in Turkey, Its ranges between (0.1% and 0.6% rate).
The location matter in Turkey also; the city determines the taxes rate; hence, the 0.2% rate imposes for ordinary properties such as flats or buildings in megacities.

Also, considering the real estate properties held in big municipalities, for example, in Istanbul, there're big wealthy municipalities such as (Maslak, Besiktas, Kadikoy), its annual property tax rate is fixed at (0.4%) per year, But in other municipalities such as (Esenyurt, Sultanbeyli) the yearly tax is set at the rate of (0.2%), that means, the annual tax might differ from one municipality to another; meanwhile, the foreigner must investigate about the tax in each municipality.

But what about the Real estate residential properties taxes?
In megacities, the taxes are set to a (0.2%) rate annually, while in the suburbs, fixed at a (0.1%) rate. Commercial properties are taxed at (0.4%), while taxed at a (0.6%) rate for lands.

The monthly taxation of property in Turkey:
Monthly payment to a government entity (Gas and Electricity Corporation):

In Turkey, the monthly taxation depends on the investor's willingness and how the property is invested,
For instance, one of the monthly taxes in Turkey is the (DASK) tax, which is compulsory insurance against earthquakes; it's paid to the government and specifically to the municipalities of the real estate property location.

The mandatory insurance (DASK) belongs to the title deed owner. Meanwhile, when the investor wants to handle the property as an investment, if the owner rents the property, the tenant will pay the (DASK), not the owner, as long as the property is rented, the (DASK) will be paid monthly when the electricity and gas bill is delivered.

However, the tax won't be paid if the apartment is not personally used or invested.

For sure, there's additional optional insurance includes additional insurance on the property inside the house; the private companies pay for it, and up to the owner, the amount and the type of the insurance would also differ according to what the insurance company would afford, and what the owner would pay.

What is the V.A.T tax, how it's calculated, and for who will be paid:
One-time payment to a government entity (Vergi Dairesi):

In Turkey, the investor cannot buy a property without paying the V.A.T tax; its value depends on the type of the property; for instance, the commercial property's tax is 18% as a V.A.T., but for the residential properties, it depends on the interspace of the residential apartment for example:

Suppose the property interspace is below 150m; in that case, the V.A.T. will be calculated as 1% because it's seen as a human right to have 150m as its interspace without paying high valuable tax. Still, when the property's interspace is beyond 150m, the V.A.T. tax will be calculated 8% or 18%; the final value of the tax will be determined on the location of the municipality, the readiness, and the situation of the property construction, plus the cost and the luxurious of the materials of the real estate property, all these elements, will play an important rule to assume the final rate of the V.A.T. tax.

The V.A.T. tax is paid for the government, not for any private administration (Vergi Dairesi). It is paid once the investor buys the property and obtains the title deed; meanwhile, it's considered a one-time payment tax, But did you know that you have the right not to pay the (Value-Added Tax - V.A.T.) as a foreign investor? What is the tax exemption in Turkey?

Tax Exemption for Forginer investor in Turkey:
As a foreign investor, you need to know that the Turkish government, as an encouragement move that aims to attract more foreign investors to move their significant investments to Turkey, did establish a new law of (TAX EXEMPTION), which is totally canceled the V.A.T, in one necessary condition, which determines the investors to transfer the value of the wanted property in Turkey, to Turkey in a legal way, (WESTERN UNION, Bank Transfer), By illustrating the cash transfer receipt to the tax administration in Turkey (Vergi Dairesi), it will immediately exempt the foreign investor from the V.A.T. tax, Whether it is 1, 8, or 18%, the property's sort also, whether is a residential or commercial property,  the type won't be an impediment in front of the foreign investor to get the exemption.

The tax of transfer of ownership, when the investor will pay it:
One-time payment to a government entity (vergi dairesi):

It's considered a one-time payment too, the owner of the property will pay (the transfer of ownership tax) after signing the contract of the property, this tax is paid directly, only if the value of the property is paid in CASH, the value of the transfer of ownership tax's value is 4% on the total value of the property.

This tax is divided equally between the foreign investor and the Turkish construction company in most cases. The new owner will pay 2% to the government, the tax administration (Vergi Dairesi), and the construction company will spend the rest of the 2% of the tax.

But what the foreign investors should be familiar with is that no law in Turkey forces the construction company to pay half the value of the (transfer of ownership tax).
Therefore, the foreign investor must inquire about this part before signing the contract to know its taxes.

Eventually, Turkey's tax structure was established to serve both the buyers and sellers, with a flexible method including many exemptions.

However, it might seem like a complicated issue to comprehend. Our team is ready to offer you more information about the taxation issue in Turkey; connect with us and let us give you all the knowledge you deserve to gain.

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