Lawyer in Turkey: November 2014

Tuesday, November 18, 2014

Property Tax Turkey 2015

Amendment proposal property Tax 2015
Increment value tax– upcoming amendment 2015

In most Western European tax systems do levy tax over real assets property, but in Turkey the situation differs. There are no tax charges in Turkey for real asset property on individuals.  Perhaps that is the main reason why Turkey has a pleasant investment climate for indivuduals and of course foreigners.

However, Turkey does apply value tax, based on price increment by real estate sales. The main rule is: The seller is obliged to pay increment value tax, if the real estate property is sold within five years of purchase with price increment above the deductible amount.

The deductible amount for 2014 is 9.700, -TL.
The increment value tax charges are between 15% to 35%.
In addition to is also levied 10% fund (fonpayı).
For more details on the tax rates, I refer you to my website or blog address.

Increment value tax is just applicable on real estates sales, in the same fiscal year.
This is called in Turkish “değer artis kazancı” and depends on your personal declaration to the tax office. The tax office will not send you any tax declaration form ("beyanname") automatically. You must fill up the form yourself at the Tax office. If multiple sales occur in the same fiscal year, you have to  declare all of them in the same declaration.

It is true that the base for increment value tax is not determined by the actual purchase price, but on the base of the reference value determined by the Municipality.

For instance:
You buy a house for 80,000 Euro, but on the Tapu you only see a reference value of 80,000 TL.
Within five years you are selling it for 85,000 Euro but on the Tapu you are declaring the increased value given by the municipality of 100,000 TL. The difference between the purchase amount and sale amount with the exemption amount reduced to this brings your base of increment value taxation to be declared.

The tax levies on property in Turkey are constantly subject to changes. My regular readers will know that the Turkish government has increased the Tapu costs and charges for the last 10 years.

The most recent publication scheduled for 2015 is related to the expected increase of reference value in contrast to fair market value of real estate property. This could mean that with a possible sale of your home, you will pay significantly more Tapu transfer costs and pay on an increment value tax as described above.

The amendment proposal by November 2014 is a fact and we will see the implementation soon.