Understanding the system of real estate taxes in Turkey is a fundamental step for any local or foreign investor looking to buy property in this promising market. These fees form an important part of the total cost of buying a property, and must be calculated accurately to avoid any unexpected surprises during the purchase process.
From the Tapu tax in Turkey to the annual property tax in Turkey, the tax system is designed to be clear and straightforward. Baki Investment provides its clients with a comprehensive guide that explains in detail all real estate fees in Turkey, enabling you to make accurate financial planning and studied investment decisions through prior knowledge of calculating real estate taxes.
Property Transfer Tax (Tapu): The Most Prominent Fee Upon Purchase
The Tapu tax in Turkey, or what is known as the property transfer fee, is one of the most important government fees for property and the most common. This tax is imposed once when signing the purchase contract and registering the ownership in the real estate registry.
The rate of property transfer fees in Turkey is 4% of the value mentioned in the sales contract or the estimated value of the property, whichever is higher. This percentage is usually divided equally between the seller and the buyer, with each paying 2%.
How to Calculate the Tapu Tax
To calculate the property tax in Turkey related to property transfer, the value mentioned in the sales contract or the estimated value determined by the municipality is taken. Investors should ensure that the value mentioned in the contract reflects the real price of the property to avoid any future problems.
Value Added Tax: When Does It Apply and When Is It Exempt?
Value added tax in Turkey on real estate varies according to the type of property and the nature of the seller. Generally, new residential apartments sold by contracting companies are subject to value added tax.
The tax rate is 1% for residential apartments, 8% for commercial buildings and offices, and 18% for undeveloped lands. While real estate sales between individuals (non-companies) are exempt from value added tax in most cases.
Exemptions and Special Conditions
The buyer should inquire from the seller or real estate agent about the property’s eligibility for value added tax in Turkey. Some types of properties, such as those sold for the first time by construction companies, are subject to this tax, which increases the total cost of buying a property.
Annual Property Tax: The Continuous Obligation of the Owner
The property tax in Turkey is considered one of the annual obligations that every property owner must fulfill. This tax is imposed annually on all properties owned in Turkey, and its value varies according to the type of property, its area, and location.
The rate of real estate taxes for foreigners and locals on residential properties ranges between 0.1% to 0.6%, and reaches 0.2% to 1% for commercial properties, depending on the property value and the municipality’s assessment.
Due Dates for Property Tax Payment
The property tax in Turkey is paid in two installments in May and November of each year. The owner must update his address in the municipality records to receive tax notices regularly.
Additional Fees: Costs You Might Not Consider
In addition to the main taxes, there are several fees for buying property in Turkey that must be taken into account. These fees include real estate appraisal costs, notary fees, costs of opening a bank account, and health insurance for foreigners.
Tapu fees and notary fees usually range between 1000 to 3000 Turkish lira, depending on the property value and the complexity of the transaction.
Calculating the Total Cost
To accurately calculate the total cost of buying a property, all real estate fees in Turkey mentioned above must be added to the basic purchase price. This step is necessary to determine the final required budget.
Taxes on Income and Rent: Managing Real Estate Revenues
When renting the property, the resulting income is subject to real estate income tax in Turkey. Owners must declare annual rental revenues and pay due taxes according to the tax bracket they fall into.
Real estate income tax in Turkey starts from 15% for low income and rises to 40% for high income, with specific exemptions for income that does not exceed a certain limit.
Tax Return for Owners
Property owners must submit an annual tax return to declare rental profits. It is advisable to use a specialized accountant to supervise real estate taxes in Turkey related to rent.
Frequently Asked Questions (FAQ)
1. What is the rate of property transfer tax in Turkey?
The rate of the Tapu tax in Turkey is 4% of the property value mentioned in the contract or the estimated value, whichever is higher. This percentage is usually divided between the seller and the buyer so that each pays 2%.
2. Do foreigners pay higher real estate taxes in Turkey?
No, real estate taxes for foreigners in Turkey are the same as for Turkish citizens. Everyone is subject to the same tax system regarding property transfer tax and annual property tax.
3. What is the difference between value added tax and property transfer tax?
Value added tax in Turkey applies to new properties sold by companies, while property transfer tax applies to all sales and is the property transfer fee registered in the Tapu.
4. How can the total costs of buying a property in Turkey be calculated?
To calculate the total cost of buying a property, fees for buying property in Turkey (such as Tapu tax and notary fees) must be added to the purchase price. These fees usually range between 5% to 8% of the property price.
5. When should the annual property tax be paid?
The property tax in Turkey is paid in two installments, the first in May and the second in November of each year. The payment notice is sent to the owner’s address registered in the municipality.
Conclusion
In conclusion, comprehensive understanding of the system of real estate taxes in Turkey is the key to a successful real estate investment free of unpleasant surprises. From the property tax in Turkey upon purchase to the annual property tax in Turkey, these fees are clear and straightforward when understood correctly.
Baki Investment offers its clients not only the best real estate opportunities but also specialized tax consultation that ensures knowing all real estate fees in Turkey in advance. We guarantee you full transparency in all costs and fees, and help you in calculating real estate taxes accurately to make a studied investment decision.
Do not let tax aspects hinder your dream of owning a property in Turkey, contact our advisors at Baki Investment today to get a detailed cost analysis and our assistance in every step of your investment journey