Property Guide Turkey

Which Taxes Should be Paid When Buying Property in Turkey?

Along with Turkey continues to grow steadily to become one of the world’s leading economies. It attracts more and more foreign investors day by day. Especially in recent years, the return to profitability of property investments made in Turkey seems to be high. Another important issue to be considered for foreign investors, foreign investors have to pay taxes when buying property in Turkey.

Foreign investors are subject to taxation as limited taxpayers for buy or sales of their property. In addition, sale of property may be subject to value added tax in some cases. You can find details that kind of tax to pay of foreigners who buy property in Turkey.

What are the main taxes on property investment?

In principle, each property acquisition by individuals is subject to certain treatment taxes, such as “Land Registry Fee”, “Value Added Tax”, “Stamp Tax” and “Notary Costs”. Also, to own property in Turkey, “real estate tax” makes the payment of a so-called property tax necessary. Income from the property, such as rental income or capital gains, is also subject to “Income Tax”. Each of the aforementioned taxes is subject to a certain calculation, payment and declaration rules, and of course, some exemptions exist.

What is Title Deed Fees? How is it calculated and paid?

Land Registry Fee is calculated by the Law on Fees for the purchase/sale of the property, registration of the lease agreement and any transactions carried out in the land registry office such as the annotation of any transactions made in the registry office.

At the time of acquisition, the 4% deed is calculated over the sale price and collected separately from the buyer and seller. This fee must be paid to the tax office before proceeding with the registrar.

Value Added Tax (VAT) is valid for all property acquisitions in Turkey?

In principle, held in Turkey every commercial, industrial and professional transaction is subject to VAT. Therefore, in principle, property sales are also covered by VAT. On the other hand, VAT is not applicable for property sales if:

The first of a residential or business place; (Ii) work or residence permit availability more than 6 months time is Turkish citizens living abroad are, (ii) foreign nationals who are not resident in Turkey or (iii) where the business center in Turkey and found a place of business or in Turkey be transferred to recipients residing in representatives of legal entities that do not generate income through the state’s position in Turkey VAT exemption applies.

What are the VAT rates for property acquisition?

The general VAT rate in Turkey is 18%, this rate applies to property sales. In principle, all property sales, including offices, residential properties, land acquisition, etc., are in principle subject to 18% VAT calculated on the sale price. However, different VAT rates have been determined for residential properties that meet certain conditions.

What is Stamp Tax and how does it apply to property transactions?

In principle, stated in the contract or agreement signed in Turkey are subject to a rate of 0.948% stamp tax on the highest monetary value referred to in the contract. Please note that the Sales Commitment Agreements are exempted from stamp duty and Prepaid Housing Sales Agreements are subject to 0% stamp duty. Lease agreements are subject to 0,189% stamp duty.

On the other hand, agreements signed between individuals who do not engage in any commercial activity are not subject to stamp duty. Signed parties are mutually responsible for the payment of stamp duty. If the parties conclude their agreements in front of the registrar, no stamp duty is calculated.

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