Tax related to property and real estate in Turkey concerns;

All information on taxes shown below is subject to change without notice. Please seek expert advice from a qualified tax advisor.

Non-resident individuals are liable for income tax only on income earned in Turkey.

Foreigners are regarded as resident if they stay in Turkey without interruption for more than six months in a calendar year.

Income tax is charged on a trade or business, employment, professional services, dividends and interest, agriculture and rentals.The residency rules and taxation rules change continuously and so expert advice is essential.

The general rule is that taxpayers must remit the amount of tax due in two equal payments. Taxpayers carrying on business or professional activities must make quarterly income tax payments during the tax year.

Income from the sale of immovable property within 5 years from the date of acquisition will be subject to income tax, which is determined as the capital gain between the purchase price stated on the tapu, and the sales price stated on the tapu. An expert can advise the inflation indexation applicable, if any.

As an example, subject to continuous updates for which expert advice is essential, in determining the taxable capital gain, the acquisition cost is adjusted for inflation by the increase in the producers' wholesale price index between the date of acquisition and the date of sale. This adjustment can be made if the rate of increase in the wholesale price index for the period concerned is 10% or above, but the acquisition cost may not be adjusted for price increases below 10% for the purpose of determination of taxable capital gain. Net taxable capital gain is calculated by deducting the acquisition cost (inflation adjusted) and the expenses incurred/duties paid by the seller to realise the sale transaction.

Tax Deductions and Allowances - Available deductions depend on the type of income. For business income, the same general deductions as apply to corporations are available. If a proeprty owners rental income is to be taxed as business income with applicable allowances, expert advice is essential.

Real Property Tax - Real property tax is levied based on the value of the land or buildings. For residential property these are determined by the local government authority. In practice, these declared valuations are substantially below current market values.  Property tax is calculated in respect of each property at the tax value set at the year of acquisition, which is then revalued annually with the half of the revaluation rate announced by the Ministry of Finance. The rate of the tax on the taxable values of buildings is 0.1% if the building is used as residence and 0.2% for other buildings. The rate of tax on the taxable values of property in lands is 0.3%. These rates will be doubled in metropolitan areas.

Real property tax paid by individuals deriving business income is deductible from the income tax base for commercial business activities, provided the property is recorded as a business asset. Individuals that derive rental income from real estate also may deduct the real property tax paid in determining the taxable amount of rental income.

Turkey Tax Year- Turkey tax year is calendar year or fiscal year.

Filing and Payment of Tax - An income tax return must be filed by all individuals that derive business or professional income. For other types of income (e.g. salary, income from securities, income from immovable property, capital gains, etc.), the obligation to file an annual return depends on the type of income, the amount, and the exemption limits applicable. Individuals who are required to file an annual income tax return must submit the return between the first and 25th day of March of the following calendar year. Income tax accrued must be paid in 2 equal installments in March and July.

The standard rate of VAT (Katma Deger Vergisi - KDV) in Turkey is 18%, with reduced rates of 8% applicable to basic foodstuffs, tourism services; pharmaceutical products and other items, and 1% for journals, newspapers and certain farm products. Certain supplies are exempt.

Filing and payment of tax VAT payments are due monthly. VAT returns must be filed with the local tax office by the 24th day of the following month and VAT is payable by the 26th day of the month in which the return is submitted.

Registration- There is no turnover threshold for VAT registration in Turkey. Any person or entity engaged in an activity within the scope of the VAT law must notify the local tax office where its place of business is located. If there is more than 1 place of business, VAT registration is made at the same tax office at which registration occurred for income / corporation tax purposes.