How Did Property Taxes Change in Turkey in 2023?

The Republic of Turkey is an Asian state 10% of which is in Europe. Famous for its sea coasts, 4 seas, and mild climate, the jurisdiction boasts an appealing immigration scheme luring foreigners with an opportunity to obtain residence permits or citizenship by investment in Turkey.

Apartment maintenance and taxes thereon are hot issues that many people are interested in. Are property taxes high in Turkey in 2023 after the government raised the corresponding tax rates? How do foreign property owners pay property taxes and how much does one need to budget for the above expenses?

Property tax in Turkey

If you purchase residential properties, lands, houses, villas, or commercial real estate in Turkey, Tapu is the first obligatory payment you will make. Below, you can find the terms and conditions of paying property tax in Turkey when you register title to your newly purchased Turkish property:

• In Turkey, Tapu is issued by the General Directorate of Land Registry and Cadastre and may have any of the following forms:
  • blue certificate, i.e., a document certifying your title to land and joint ownership
  • red certificate, i.e., a document issued for residential or commercial properties that are individually owned.
• If properties are purchased on credit or mortgage and pledged to the bank, Tapu is not issued until the debt to the financial institution has been paid in full. 
• Here’s how property, land, or commercial real estate taxes are paid in Turkey:
  • if the property is purchased on the primary market, both the buyer and the seller shall pay 50% of the corresponding tax in equal shares
  • if the property is purchased on the secondary market, taxes are paid by the buyer.

• Tаpu Devir Vergisi – in Turkey, the Tapu tax is paid when titling property in the General Directorate of Land Registry and Cadastre alongside the Döner Sermaye fee. As of 2023, the latter makes up TRY 1299 (or approximately USD 70).
• Tax on closing sale and purchase deals makes 4% of the property unit estimate value. Included in Tapu as well, the latter is taken into account when an application for a residence permit or permanent residency in Turkey is processed. NB: the amount the buyer transfers to the seller is often much higher than the one stipulated in the title document, with the difference reaching up to 60%.

In the case of properties in Turkey, registration tax may be paid either in cash or other than in cash. As a rule, foreigners about to make property deals in Turkey, open bank accounts in the jurisdiction to dispose of their assets without any restrictions and make payments to the state budget.

VAT on real property in Turkey

Turkey has 3 types of VAT rates:

• VAT of 1% is applied for budget-friendly properties
• VAT of 8% and 18% are the VAT rates for large-sized high-end apartments and commercial property units. 

In 2017, the government of Turkey canceled the above tax for foreign buyers and substituted it with a tax deduction that is applied to newly built properties purchased from developers. Below, VAT-exempt persons are listed:

• citizens of Turkey with foreign residence permits 
• foreign nationals who don’t reside in Turkey
• non-resident overseas companies (legal entities) with no sources of profit or office in Turkey. 

NB: Turkish nationals who live abroad yet work for companies or organizations in Turkey are not eligible for VAT benefits. 

To get their VAT exemption, property buyers in Turkey should use the services of a highly-qualified tax expert and retain ownership of the property for over a year. If the property is sold before the said 1 year of ownership expires, the set VAT rate is applied and VAT is paid as provided for under the laws currently in force when the sale and purchase deal is made.

Annual property tax (emlak vergisi) in Turkey

In Turkey, property owners should account for annual tax contributions that depend on property cost and location.

Here’s what property, land, and commercial real estate taxes you will annually pay in Turkey as of 2023:

Property type	In large provinces	In other cities or regions
Residential property	tax rate of 0.2%	tax rate of 0.1%
Commercial property	tax rate of 0.4%	tax rate of 0.2%
Land plot without a building permit	tax rate of 0.2%	tax rate of 0.1%
Land plot with a building permit	tax rate of 0.6%	tax rate of 0.3%

İstanbul, İzmir, Ankara, Alanya, Antalya, Mersin, Van, Trabzon, Mugla, Konya, Erzurum, Diyarbakır, Kocaeli, and Samsun are considered to be big cities in Turkey. 

In the case of buildings classified as cultural heritage in Turkey, the tax is paid at a 10% rate,

Residential properties above TRY 9,967,000 are taxed as high-end residential properties (Değerli Emlak Vergisi), with increasing tax rates applied.

FYI: in case Turkish properties come without an apartment (or house) specifications sheet (iskan), the property is deemed to be a land plot with a building permit, and the highest tax rate allowed is applied thereto. 

Income tax on residential property sale and rent in Turkey

Regardless of whether properties are sold or rented out in Turkey, income tax is paid thereon. In 2023, certain amendments were introduced as far as tax-exempt income amount is concerned. With a wave of property price hikes and access to citizenship by investment in Turkey, foreigners purchase residential and commercial properties in Turkey more often than in previous years. Even with tax rates amended, the property tax in Turkey is still below the one in Europe. Notwithstanding the global crisis, Turkey never lost its appeal with international property buyers.

Rates of income tax on residential property sale in Turkey for individuals

You are not obliged to submit a tax return if the corresponding property unit was held by the owner thereof for at least 5 years. If the property is sold earlier, income tax is paid on the capital increase (i.e., the difference between the purchase price and the sale price stipulated in Tapu).

The above income tax is not paid if the capital increase is below or equal to TRY 55,000. If the capital increase is above the threshold, the income tax is calculated under the same rules that govern income tax payments in the case of rentals (for more information, please refer to the rental income tax table below).

Rental income tax in Turkey

Since 2003, rental income tax has been paid in Turkey if rental income is above TRY 21,900. Rental income tax is governed under Article 21 of Turkish Law on Rental Income Tax No. 193. In the case of commercial property, the tax-exempt amount of rental income tax in Turkey is TRY 35,000 as of 2023.

If rental income is above the said threshold, the following rates apply: 

Rental income, TRY	Rental income tax rate
up to 70,000	15%
70,000 to 150,000	20%
150,000 to 550,000	27%
550,000 to 1,900,000	35%
above 1,900,000	40%

Inheritance (Miras Vergisi) and gift (Hediye Gayrimenkul Vergisi) taxes in Turkey

In the case of inherited property as well as property received as a gift, taxes in Turkey are based on the cadastral value of such a property. As of today, they are as follows:

Property value determined by the administration, TRY	Property inheritance tax	Property gift tax
up to 1,100,000	1%	10%
+ 2,600,000	3%	15%
+ 5,500,000	5%	20%
above 10,900,000	7%	25%
above 20,100,000	10%	30%

The said tax rates are applied not to the total value of property in Turkey but to the ranges thereof that you can see in the table above. In each case, tax is calculated using a separate tax rate.

How do you pay property taxes in Turkey?

To be able to pay property taxes in Turkey, both Turkish residents and foreign nationals have to obtain TIN in Turkey. Without it, they are not authorized to pay taxes, state fees, and stamp duties in Turkey. 

Any taxes apart from municipal ones can be paid on the website of the national tax service (https://ivd.gib.gov.tr/tvd_side/main.jsp). 

In 2023, real estate tax in Turkey is paid either in 2 installments in May and November or as a lump sum payment. Depending on a particular province and tax type, the above timeframe may vary.

Foreign investors are exempt from double taxation and may benefit from the Double Tax Treaty Turkey made in 2023 with over 80 states.