This article provides an overview of the main taxes applicable to real property owners in Turkey.
i. Stamp Tax
According to Stamp Tax Law No.488 , stamp tax is applied to a wide range of legal documents such as contracts, agreements, financial statements and tax returns. The tax base differs depending upon the nature of the document. The rate of 0.948 per cent applies to property sale contracts as of the date of this article.
ii. Property Transfer Tax
According to Article 56 of Law on Charges No.492 , transfer of a real property is subject to a transfer tax of 4 per cent. The property transfer tax is payable by both the buyer (2 per cent) and the seller (2 per cent) whereas local practices may differ. The tax value is the sale value of the property which in any case may not be less than the estimated market value of the property determined by the relevant municipality. Until October 31, 2019, property transfer tax has been decreased to 3% in total (1.5% each).
iii. Property Tax
Buildings and land in Turkey are subject to real property tax on the basis of Property Tax Law No. 1319 . The tax value is the estimated market value of the property determined by the relevant municipality. The rate of building tax is generally 0.2 per cent, although the rate falls to 0.1 per cent for buildings used as residences. The land tax rate is 0.1 per cent, and the parceled land tax is 0.3 per cent. These rates are increased by 100 per cent within the boundaries of metropolitan municipalities and contiguous regions as defined by law.
iv. Value Added Tax (VAT)
According to the Law on VAT No. 3065 , all deliveries of goods and services that take place in Turkey in the context of commercial, industrial, agricultural and professional activities are subject to VAT. Imported goods and services are also subject to VAT. The person liable for the payment of VAT is the one delivering the goods or services. In the case of imports, this is the importer.
The VAT that a taxpayer pays for goods and services purchased can be offset against (i.e., deducted from) the VAT received on deliveries of goods and services made. When the amount of VAT on sales is greater than the amount on purchases, it is this positive difference that the taxpayer pays to the tax office. Where the reverse is true (i.e., input VAT is more than output VAT), the difference is not – as a rule – refunded to the taxpayer (there are exceptions, however, such as input VAT on exports). Instead, it is carried forward and can be offset against future VAT collections.
The general VAT rate of 18 per cent also applies to most real properties whereas reduced VAT rate of 1 per cent applies to houses up to 150 m2. Also, sale of properties that are not owned by commercial enterprises are exempt from VAT.