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Taxes & Compulsory insurance

6.1 Basic property-related taxes

With regards to real estate in Turkey, following taxes or compulsory insurances are in question:

You can find further information about Turkish tax system on Turkish Revenue Administration's website at www.gib.gov.tr.

6.2 What gains can be attained through property? Are those gains taxed?

A real estate property may enable an individual to obtain two types of gains.

Firstly, you can rent it out and earn rental income. In that case, you are to pay a personal income tax. Please see the section regarding personal income tax below (6.3.10) for more information.

Secondly, the market value of your asset may rise and hence you can attain a gain. If you sell out your real property in the five-year-period following the acquisition date, you shall be subject to personal income tax based on the difference between the selling price and the inflation-adjusted acquisition price. Producer Price Index (PPI) is applied to acquisition price for Inflation adjustment excluding the months in which property is acquired and sold out if the inflation exceeds 10%.

For sales by individuals after the 5-year-period following the purchase, no personal income tax is charged on the gains to be attained.

If a property bought before 1st January 2007 (Title Deeds date) by an individual, is sold in the four-year-period following the acquisition date, the difference between the selling price and the inflation-adjusted acquisition price is subject to personal income tax as a capital gain. After four years, sales of these properties are not subject to personal income tax.

However, TL 7,700 of the gain attained from sale is exempted from income tax starting from 1st January 2010. (TL 7,600 in 2009)

On the other hand, firms which are subject to corporate tax are exempt from any corporate tax relating to the real estate-based gains, real estate sale-and-acquisition levy, and VAT, if they sell a real estate that they have owned for at least two years and add the gains to their capital.

6.3 Taxes and Compulsory Insurance

Foreign nationals and Turkish citizens are no different in terms of taxes or levies to be charged.

Tax rates may be updated on a periodic basis. Please have a look at www.gib.gov.tr for updates and other relevant information.

6.3.1 Real Estate Tax

Annual Real Estate Tax rates for cultivated land, uncultivated (for building) land, non-residence-purpose buildings, and residential buildings are 0.1%, 0.3%, 0.2%, and 0.1%, respectively.

Tax is calculated on the basis of the declared value of the asset which could not be less than a threshold determined by tax authorities. Tax payments are made in two equal instalments in the period March-to-May and in November each year and those are collected by the local municipality (Council). The tax base is annually updated by a coefficient determined by the Ministry of Finance taking into account the inflation rate.

The new owner of a property has to declare the actual price, which has been paid to the seller, to the municipality by end-December in the year of acquisition.

Real Estate Tax of the property in the year of acquisition is paid by the seller whereas the consecutive years’ taxes are paid by the buyer (new owner).

On the other hand, the Real Estate Tax rates for properties in the following provinces (metropolitans) are two-fold the normal rates stated above.

  • Adana
  • Ankara
  • Antalya
  • Bursa
  • Diyarbakir
  • Erzurum
  • Eskisehir
  • G.Antep
  • Icel
  • Istanbul
  • Izmir
  • Kayseri
  • Kocaeli
  • Konya
  • Samsun

6.3.2 Real Estate Sale-and-Acquisition Levy

Each of buyer and seller is to pay real estate sale-and-acquisition levy of 1.5%, based on the declared value of the asset (This value cannot be less than the threshold determined by authorities). It is collected in prior to the transfer of ownership at TAPU (Land Registry) Office.

On the other hand, for the registry of a new building constructed on a land, a levy of 1.5% based on the reference value of the asset is to be paid.

6.3.3 Inheritance and Succession Tax

The transfer of property within Turkey, from one to another without any payment or by inheritance are subject to Inheritance and succession tax.

Taxpayer is the person who acquires property by inheritance or gratis.

Inheritance and succession tax is assessed on the declaration submitted by taxpayer.

In the case of inheritance, the declaration should be submitted in four months starting with the date of death. If the death occurs in Turkey and the taxpayer is outside of Turkey, the declaration period is extended to six months. In the case of occurrence of death and being of taxpayers outside of Turkey, the declaration period will be again four months. However, when the death occurs in a foreign country and the taxpayer is in another foreign country, the declaration period is extended eight months.

In the case of transfers by gratis, the declaration should be submitted in one month following the date of acquisition of the property.

The tax base is updated annually. There are some discounts for inheritance to daughters, sons and spouses. In case a spouse and children including legally adopted ones are to take over an inherited property, then the amount of TL 109,971 is deducted from the tax base of each person. In case only a spouse is the heir, the amount of deduction from the tax base is TL 220,073. In case of successions without reciprocity (gifts) the amount of deduction is TL 2,535 from 1st January 2010.

As of 1st January 2010 the applicable tax base brackets and rates are as follows:

Tax Base Brackets (Based on the value of the inherited asset) Inheritance Tax Rate Succession Tax Rate (When no reciprocity exists)
First TL 160,000 1% 10%
Next TL 350,000 3% 15%
Next TL 770,000 5% 20%
Next TL 1,500,000 7% 25%;
Amount above TL 2,780,000 10% 30%

Please note that a levy of 0.9% of the value of the property is also charged while the inherited property (or the gift) is being transferred into the name(s) of the new owner(s) at TAPU (Land Registry) Offices.

6.3.4 Environmental Services Tax (EST)

For residential properties, local water suppliers charge an EST of TL 0.16 per one m3 of water used.

For non-residential buildings, the EST is a flat rate and ranges between TL 16 and TL 1,900 per year.

The rates for metropolitan cities, on the other hand, are TL 0.20 / m3 of water used by residential properties and a flat rate of TL 20-to-TL 2,375 for non-residential properties.

6.3.5 Motor Vehicle Tax

Depending on the cylindrical volume or horse power of engine and date of production of the vehicle, vehicle owners have to pay an annual tax ranging between TL 13 and TL 32,646 for 2010. Motor Vehicle Tax is paid annually in two equal instalments in January and July.

Category Amount of Tax (TL)
Lower Limit Upper Limit
Motorbikes 13 977
Cars and others 45 14,689
Minibus, bus, truck, pick-up truck 160 2,200
Aircraft, helicopter 3,915 32,646

6.3.6 Corporate Tax

Corporate entities had to pay a tax of 30% of their previous year profits. Corporate Income Tax rate was lowered to 20% by the new Corporate Income Tax Law published in the Official Gazette on June 21, 2006. The new rate will apply to all corporate incomes earned after 1st January 2006.

6.3.7 VAT

General VAT rate is 18%. However, some goods and services are taxed at either 1% or 8%.

Commercial delivery of a residential property with net area up to 150 m2 is subject to a VAT of 1% whereas commercial delivery of those with more than 150 m2 is subject to a VAT of 18%.

6.3.8 Special Consumption Tax (SCT)

Some goods which have effects on the environment, security and health, and luxuries such as.

6.3.9 Stamp Duty

There is a wide range of transactions on which a stamp duty is charged. The Stamp Duty rates applied to contracts in which a monetary clause exists and tenancy contracts are 0.75% (of the amount stated in the contract) and 0.15% (of the rent), respectively.

6.3.10 Личный подоходный налог

Main personal income items which are taxed are commercial income, agricultural income, wages, self-employment revenues, rent, interest and other incomes. Personal income tax rates for the year 2010 are shown in the table below. (Click here for the tax rates for rental income earned in 2009)

However, Turkish Income Tax Law exempts some amount of rental income from residential buildings for individuals annually. For the year 2010, the residential rental income up to TL 2,600 is exempted from income tax. This exemption amount is also TL 2,600 for rental income earned in 2009. On the other hand, a flat rate of 25% for maintenance expenses is deducted from taxable rental income.

Please keep in mind that if you earn rental income more than exempted amount and do not declare to local tax office or under declare, exemption does not apply and you could face severe penalties. Therefore you must register with local tax office and declare your rental income. It must be declared between 1st and 25th of March and the income tax must be paid in March and July in two equal instalments. Rental income earned in 2009 (If exceeds exempted amount) must be declared from 1st to 25th of March 2010.

Cumulative Income (TL) Income Tax
(For income earned in 2010)
Lower Limit Upper Limit
0 8,800   15% of the income
8,800 22,000 TL 1,320 for the previous slice plus 20% of the rest
22,000 50,000 TL 3,960 for the previous slices plus 27% of the rest
50,000 -- TL 11,520 for the previous slices plus 35% of the rest

As can be seen above, your rental income and the capital gain you will attain when you sell out your property within a five year period following its purchase in Turkey are subject to personal income tax.

In this regard, you are supposed to declare your annual rental income to the local tax office on an annual basis whereas you are to immediately declare your capital gain as soon as a sale subject to personal income tax is carried out.

Most tax offices do have office automation and internet-based interactive systems. Thus, you can go to a local tax office and fill out a form (tax return) there, or fill out the relevant form to be downloaded from the web page of the Revenue Administration or to be obtained from the Office of Financial Counsellor at Turkish Embassy in London (see bottom of page for contact details) and then submit it to the tax office.

Moreover, individuals (including foreigners) who earn only rental income in Turkey are able to send their tax returns through internet to the tax offices offering online services. For further information please refer to the Guideline prepaired by the Revenue Administration. The Guidline is also available in Turkish and German.

You’re also advised to contact a financial advisor or the local tax office in order to gather information on when to make the rental income declaration and to pay the associated tax.

6.3.11 Minimum wage

From 1st January 2010, minimum gross wage for 30 calendar days is TL 729 for employees at the age of 16 or more (The cost to employer is TL 885.74/employee). The gross wage will be TL 760.50 from 1st July 2010.

Minimum wage is applied nation-wide and updated periodically. The Minimum Wage Commission composed of the social partners advices the Government on what the minimum wage ought to be, and the Government determines the amount taking into account this advised figure.

6.3.12 Social insurance

According to Turkish social security laws, self-employed & farmers, employees (wage earners) and civil servants have to register to Bag-Kur, SSK, and Emekli Sandigi, respectively. These are compulsory schemes.

Contribution rates for these schemes range between 35% and 40% of the contribution base.

The main risks covered by these schemes are old-age, disability/invalidity, health, maternity, mortality, orphanage, widow(ed), unemployment (for the employed).

Minimum retirement age for the new entrants is 58/60 (F/M).

Please have a look at www.csgb.gov.tr and www.sgk.gov.tr for further information.

6.3.13 Earthquake Insurance

Property is to be insured by the owner against the earthquake risks. It is compulsory and a national uniform tariff is applied.

Other property insurance types can be freely bought from the market and they cover some risks including theft and fire. For further information please visit our insurance page.

6.3.14 Motorists Insurance

If you possess a car, you are obliged to buy a motorists (traffic) insurance. The cost of policy depends on the cylindrical volume of the engine and the production date of the vehicle.

6.4 Preparation of wills and transfer of property to the heirs

Wills prepared by foreign nationals in their own countries can be executed in Turkey so as to transfer the ownership of a property to the individual(s) stated within the wills.

To carry out the property transfer pursuant to a will, a heir has to gather a court letter confirming the will from the relevant court of his/her own country and to have it ratified at the Turkish Consulate General. Then he/she has to submit that letter to the relevant court of the province in Turkey where the property is located. Then, the Turkish Court issues an official document which allows the transfer. Finally, the heir presents the document granted by the Court to the Tapu (Land Registry) Office as well as other documents required for the transfer of ownership.

These transfers are exempt from any military clearance and the other restrictions applied to foreign nationals.

Please note that transfer of ownership of a property to an heir is subject to inheritance tax. Thus, if the heir sells out his inherited property, he is not subject to any personal income tax based on the capital gains.

6.5 Divorce settlements

When a married couple gets divorced and one of the parties is to transfer the ownership of his/her property (or a share) into the name of the other party, then this transaction is not subject to any tax except levy.

Similarly, in Turkey, subsistence payments to be made by a divorced party to the other party are all tax exempt.

6.6 Agreements for the Avoidance of Double Taxation

Agreements between the Republic of Turkey and 70 countries (including the Russia) for the Avoidance of Double Taxation can be reached through the web page of Revenue Administration. (Unfortunately in Turkish)

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