What Are Property Taxes in Turkey? Hidden Costs You Need to Know

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When considering buying property in Turkey, it’s important to be aware of the taxes associated with this investment. Knowing "What are property taxes in Turkey?" is not just a minor detail but a crucial step for a successful and sustainable investment.

In this article from DeCorner Homes, discover how you can leverage real estate opportunities without unexpected surprises, and learn about the imposed taxes and how to manage them smartly to ensure a smooth and profitable investment journey.

 

What are Property Taxes in Turkey?

Property taxes in Turkey are a set of fees imposed by the state on all real estate transactions, including purchases, sales, gifts, and inheritances of immovable property. These taxes ensure the legal regulation of real estate transactions and are a fundamental aspect to consider when investing in the Turkish real estate market.

 

Types of Property Taxes in Turkey

These taxes are categorized into different types, including those paid at the time of purchasing the property, others paid upon selling it, and additional ones during the ownership of the property.

 

First - One-Time Property Taxes in Turkey

These are taxes paid only once and are divided into:

 

Value Added Tax (VAT) on Properties in Turkey (KDV)

VAT is imposed on real estate transactions only once. The amount depends on several factors, including:

 

·      Property type

·      Geographical location

·      Price per square meter in the area

·      Property size

·      Level of available services

VAT on property in Turkey (KDV) increased following Presidential Decree No. 7346 published in the Official Gazette on July 7, 2023:

1.   Properties larger than 150 square meters are now subject to a 20% tax (up from 18%).

2.   Properties smaller than 150 square meters are now taxed at 10% (up from 8%).

This tax is paid at the tax collection office by the property development company and is typically included clearly in the property price, making it easier for buyers to manage their costs.

 

Property Registration Tax (Tapu Tax)

When registering property ownership in Turkey, a tax of 4% of the registered property price is imposed. This is usually divided between the buyer and seller, each paying 2% of the value. However, it has recently become common for the buyer to bear the full cost.

Special cases include foreign buyers (non-Turkish citizens) without previous residence permits or other properties in Turkey, who may receive a tax exemption on their first property only.

This tax is also applicable when transferring property ownership to heirs, whether the property is an apartment, villa, or other real estate.

 

Second - Annual Property Taxes in Turkey

Annual property taxes are another crucial aspect of the question: "What are property taxes in Turkey?" These are annual fees imposed on property owners to support local services and maintenance:

 

1.    Real Estate Gains Tax

This tax is applied when reselling a property in Turkey within five years of its purchase.

The tax amount is based on the difference between the purchase price in the title deed and the selling price, with rates varying from 15% to 45% depending on the tax brackets set by the Turkish Land Registry.

 

2.    Earthquake and Natural Disaster Insurance

This is an annual fee categorized as either an expense or property tax in Turkey, paid annually as protection against earthquakes and natural disasters. The amount depends on the property size and the type of coverage desired from the insurance company.

 

3.    Municipal Tax

Municipal tax is calculated based on the registered property value and is 0.2%. It can be paid in two installments: from March 1 to 31 and from October 1 to 31 each year.

This tax is paid to the local municipality via a municipal office visit or bank transfer. For example, if your property is valued at $100,000, the annual tax would be $200.

These funds are used to finance municipal services such as street lighting, paving, street cleaning, and park maintenance, which enhance the quality of life in the area.

Third - Monthly Property Taxes in Turkey

In addition to the one-time property taxes mentioned earlier, there are monthly fees known as "monthly service fees" that property owners in Turkey are responsible for.

These fees cover the cost of basic services such as security, cleaning, elevator operation and maintenance, and parking, as well as additional services like gyms, swimming pools, cafés, and salaries for the management staff of residential or commercial complexes.

These expenses are collected from residents monthly and are divided among them according to the Floor Ownership Law, supervised by the management of the residential or commercial complex, based on the size of each property in square meters. This ensures that all services are provided regularly and efficiently.

 

How Are Taxes Paid in Turkey?

Property owners can pay taxes in Turkey through one of the following methods:

1.   Using Official Applications: Pay property taxes easily and conveniently using official tax payment apps.

2.   Real Estate Companies or Agents: Rely on real estate or service companies or intermediaries to pay taxes on your behalf.

3.   Bank Account: Open a bank account at a government bank in Turkey to facilitate tax payments and document transactions through bank receipts.

 

Penalties for Late Tax Payments

Late payments of property taxes in Turkey incur increasing fines, which can multiply significantly over time.

Delays may lead to serious legal issues, including court appearances, and result in financial penalties that exceed the original tax amount.

 

Conclusion

In conclusion, understanding "What are property taxes in Turkey?" is an essential step for any investor or property owner.

From taxes associated with purchasing and selling to annual fees and community services, these costs are a crucial part of sustaining property ownership in Turkey.

While some processes may seem complex, DeCorner Homes is here to simplify matters and provide comprehensive support. We will assist you in finding the right property, completing all legal transactions, and clarifying every detail.

Don’t hesitate to request your free consultation today and connect with your specialized real estate advisor via WhatsApp to achieve your property goals with ease.

 

Edited by: ©DeCorner Homes

Sources:

Turkish Tax Administration

Official Gazette of Turkey

PwC Turkey