Turkey Real Estate Investment Guide for Foreigners (2024): Taxes and Obligations
The Turkish real estate market offers attractive opportunities for foreign investors. However, when considering these options, it is important to take tax matters into account. In this blog, we examine the tax obligations and strategies for foreigners that investing in real estate in Turkey.
Taxes and additional obligations that foreigners may encounter when buying and selling real estate in Turkey include:
1. Value Added Tax (VAT)
A foreigner purchasing real estate in Turkey may be subject to VAT in certain cases, especially for commercial properties. The VAT rate can vary depending on the type, value, and location of the property.
According to the new regulation on July 10, 2023 in Turkey, the VAT rates applicable to the sale of residential properties built under projects with building permits obtained before 01/04/2022 vary between 1% and 20%, depending on the date of issuance of the building permit, whether the construction is carried out in a metropolitan area, and whether the construction is luxury or first class.
For projects where the building permit is obtained on or after 01/04/2022, a general VAT application is implemented. The VAT rate is 10% for residential properties with a net area up to 150 m² (including 150 m²), and 20% for residential properties with a net area exceeding 150 m².
2. Title Deed Fee
If a foreign national engages in real estate transactions in Turkey, they may need to pay a title deed fee during the title deed procedures. The title deed fee is determined based on the value of the purchased property. This tax is calculated based on the sale price of the property and is paid by the buyer and seller jointly. By law, the buyer is responsible for 2% of the total, while the seller is also responsible for 2% payment.
3. Property Tax
Property tax, which property owners are required to pay annually, also applies to foreigners. This tax is determined based on the value and location of the property. This tax is paid to the municipality where the property is located.
4. Income Tax
Profits obtained from the sale of real estate may be subject to Income Tax. Gains from the sale of properties in Turkey by foreign nationals can be taxed.
Income generated from real estate in Turkey contributes to the calculation of earnings, meaning that the higher your income, the greater the amount of tax you’re obligated to pay.
5. Rental Income Tax
Foreigners are obligated to pay rental income tax when they rent out their properties in Turkey. Rental income tax requires the declaration of income and timely submission of tax returns.
Similar to regular income tax, the tax on rental income from real estate in Turkey also gradual.
| Annual Income | Income Tax Rate |
| Up to TRY 110,000 | 15% |
| 16,500 TRY for 110,000 TRY out of 230,000 TRY, and more | 20% |
| 40,500 TRY for 230,000 TRY of 580,000 TRY (40,500 TL for 230,000 TRY of 870,000 TRY in wage income), excess | 27% |
| 135,000 TRY for 580,000 TRY out of 3,000,000 TRY (213,300 TRY for 870,000 TRY out of 3,000,000 TRY in wage income), excess | 35% |
| 982,000 TRY for 3,000,000 TRY of more than 3,000,000 TRY (958,800 TRY for 3,000,000 TRY of more than 3,000,000 TRY in wage income), excess | 40% |
6. Capital Gains Tax
This tax type arises when real estate purchased for investment purposes is sold within five years. Individuals engaging in profit-oriented sales are required to pay taxes according to article 80 of the Income Tax Code titled “Capital Gains” on the gains obtained from the sale of real estate. The purpose of this payment is to tax the profit obtained after the sale of the asset.
Capital gains tax is determined by utilizing the producer price index (ÜFE) rates, which are assessed according to the ÜFE rates at the time of property acquisition and sale. In cases where real estate is transferred to a spouse or child or acquired through inheritance, capital gains tax is not paid. No capital gains tax is collected from real estate donated to associations or foundations. Since no profit is made from immovable properties with the same purchase and sale amount, no tax is requested.
It can also be calculated automatically using the calculation program available at the website https://intvrg.gib.gov.tr/hazirbeyan/artisHesapla.html (This test is prepared for informational purposes only and does not have legal binding.)
These taxes and obligations are fundamental considerations for foreign individuals wishing to engage in real estate transactions in Turkey. However, as tax laws and practices may change from time to time, investors are advised to consult relevant official sources for up-to-date information.
Working with a tax consultant or lawyer can help investors gain a better understanding of tax matters. Emlaksat legal experts will assist you in the most detailed manner. Additionally, you can find all kinds of content about selling or renting properties on Emlaksat Blog. You can call us every day from 08503079363, send a WhatsApp message from our website. Also you can send an e-mail to our e-mail address bilgi@emlaksat.com. If you like, we can also contact you if you fill out the contact form on our website.
