Real estate tax and registration expenses in Turkey
There are several types of taxes related to owning a new property in Turkey, including taxes that are paid once and taxes that are paid periodically every year.
One-time taxes:
• Real estate ownership and registration tax (Tabu tax): This tax is paid upon transferring the ownership of the property from the main owner or from the construction company and registering the title deed in the name of the buyer in the Real Estate Registry Department or the Tabu Department. The value of this tax is 4% of the value of the property paid equally between Seller and buyer.
• Value Added Tax (VAT): This tax is calculated as a percentage of the value of the property registered on the title deed. This percentage varies from 1% to 18% according to the type of property (residential or commercial), and according to the net area of this property.
Examples:
Real estate with a net area of more than 150 square meters, value-added tax is calculated at 18% of the value of the property
As for real estate with a net area of less than 150 square meters, the value-added tax is calculated at the rate of 1% of the value of the property, and the value-added tax rate is 18% for real estate with a commercial license, regardless of the area.
Foreigners can only obtain an exemption from VAT if the following conditions are met:
1- Not having a valid residence permit in Türkiye.
2- The absence of an address registered at the Civil Status Department in the name of the person concerned.
3- The property must be new and the person benefiting from the exemption is the first owner of the property.
4- Funds must be transferred from outside Turkey and proven by a bank transfer in foreign currency.
5- Undertaking not to sell the property for a full year.
Taxes that are paid annually:
• Annual real estate tax: It is a tax paid to the municipality in exchange for the services provided by the municipalities to the residents of the region.
• Tax or insurance for earthquakes and natural disasters, and its symbolic value also varies according to the area of the property and the age of the building, and it ranges from approximately 30 to 50 dollars.
You must not fail to pay these taxes because failure to pay them leads to the accumulation of interest on the amounts of these taxes and then legal accountability.
Tax attestation of the contract at the notary public in the absence of a title deed for the property:
Also, when owning a property under construction, and if the title deed has not yet been issued, the purchase of the property must be documented in the initial contract (the promise to sell contract) certified by the notary public. In this case, the tax attestation of the contract amounts to 1% of the value of the property.
Income tax :
When the real estate owner sells the property before the lapse of five years from the date of ownership and registration of the title deed, the amount of the difference between the value of the property and the sale price is considered a profit return for the real estate owner, and therefore he must pay income tax on this amount.
The rates of this tax vary (according to annual tax brackets that are determined by the Tax Department) from 15% to 35%.
But if the property is sold after five years from the date of ownership and registration of the title deed, no income tax is due on the profit resulting from the sale.
Finally, there are some expenses related to translating, printing, and attesting papers, registering subscriptions for gas, water, electricity, and a housing permit, which average between 1,000 to 1,500 dollars.