What taxes do property owners pay in Turkey?

Value Added Tax (KDV)

VAT rates depend on the type of property:

• 1% applies for residential properties up to 150 m².
• 20% for residential properties over 150 m².
• 18% for commercial properties and plots of land.

Transfer Tax (Tapu Harcı)

This tax is 4% of the value stated in the transaction documents.

Stamp Duty (Damga Pulu)

This is levied at the time of signing the sales contract and is equal to 0.948% of the amount specified in the contract.

Annual Property Tax (Emlak Vergisi)

Property owners pay an annual tax, which is calculated depending on the type and location of the property:

• 0.2% for residential properties in large cities.
• 0.4% for commercial properties in metropolitan areas.

Tax on rental income

Rental income is taxed on a progressive scale. There are two methods of calculating taxable income:

• Actual expense method: deduction of actual expenses, including utilities, repairs and insurance.
• Fixed deduction: deduction of 25% of total income without proof of expenses.

Tax rates:

• Income up to 70,000 Turkish Liras: 15%.
• 70,001 - 170,000 Turkish Liras: 20%.
• 170,001 - 880,000 liras: 27%.
• Above 880,000 liras: 35%.

Capital Gains Tax (Sermaye kazanç vergisi)

Applies on the sale of real estate owned for less than five years. The rates are similar to income tax. If ownership exceeds five years, no tax is payable.

Inheritance and gift tax (Veraset ve intikal vergisi)

Rates vary from 1% to 30%, taking into account the value of the property and the degree of kinship between the parties.

The annual estate tax is paid in two stages: by May 31 and by November 30. Penalties are provided for late payments.