You should read before taking home in Turkey; Detail Tax Guide for Turkey Homes.
In this blog we will clarify a very curious topic; What taxes do foreigners pay when acquiring, selling and using property in Turkey?
There are foreigners who buy real estate in Turkey and selling them later. A double taxation treaty agreement has been concluded with the vast majority of the countries where foreigners reside. Under these agreements, foreigners are considered as residents of Turkey, and at the same time as residents of the country in which they have permanent housing. Since the personal and economic relations of foreigners are concentrated in the foreign countries in which they are located, these countries have the right to tax as a resident country in terms of the implementation of the agreements. But if Turkey can maintain its right to taxation in the source country. In the General Communiqué on Income Tax Serial No. 210, it is stated that in terms of foreign earnings and revenues that have been obtained in Turkey, a limited liability basis should be taxed.
Foreign earnings they receive from the sale of immovable property in Turkey are taxed as income gain under income tax. Of course, these earnings include the rental income they earn. Increasing foreign interest in the real estate sector in Turkey and accordingly, actual sales, due to the supply of foreign capital inflows provide economic advantages. However, foreign real estate owners, whose number increases every year, can earn profits by disposing of the immovable they buy for investment and accommodation purposes like Turkish citizens.
⚠️ Fifteen-country nationals who most purchases in 2015 have been identified in Turkey. Double taxation agreements signed with these fifteen countries examined. The taxation authority has been identified as belonging to Turkey for real estate trading activities.
Which Are The 15 Countries?
🔹United Arab Emirates
But the most important thing to keep in mind how much a citizen of the Republic of Turkey pays tax at that rate, foreigners pay tax at the same rate.
In addition, there are important privileges against foreigners. The biggest privilege is NO VAT ON SALES TO FOREIGNERS.
In Turkey, there is no difference in principle in taxation matters related to the acquisition of property between residents who live in Turkey and who do not resident in Turkey. Foreigners and Turkish citizens are subject to the same rules. But in May 2017, a law on VAT-free real estate acquisition for foreigners passed through parliament. In this sense, it will be more advantageous to be a foreign citizen in the purchase of real estate which is the first sale of new buildings constructed as housing and business places. This exception does not apply only to a residence or business. If more than one housing or workplace is purchased, the exception can be used. In addition, the exception can only be applied to the first delivery of the building, which is built as a residence or a workplace. But remember; second-hand sales are not covered.
HOW OTHER TAXATIONS ARE DETERMINED?
You do not need to pay a tax when buying property anyway. Foreigners must also pay both title deed and real estate tax to be paid like Turkish citizens. Just as the citizens of our country pay the real estate tax, foreign people have to pay the same tax. Under the law, foreigners will have to pay property tax and have to fulfill their responsibilities. They
do not make any difference from the citizens in our country. Foreigners are also obliged to pay property taxes going to immovable property owned in Turkey. The amount payable is calculated by calculating the real estate tax rate over the value of the immovable property.
In This Case, We Ask What Are the Property Tax Rates.
The tax rate of the houses is 2 per thousand in metropolitan borders; in non-metropolitan areas is calculated as 1 per thousand. Workplace, shop real estate tax rate is 4 per thousand in metropolitan, a non-metropolitan municipality is applied as 2 per thousand. Land tax rates are as follows: The tax rate of land in the metropolitan area is 2 per thousand and the tax rate of land not in the metropolitan area is 1 per thousand; The tax rate for a land in the metropolitan area is 6 per thousand and the tax rate for a land not in the metropolitan area is 3 per thousand.
✅Let us clarify this calculation with a small example:
Property Type: Residential
Municipality: Greater City
Value of real estate: 200 thousand TL
Tax cost: 400 TL
First installment: 200 TL
Second installment: 200 TL
THE MOST IMPORTANT QUESTION: HOW IS THE INCOME TAX PAID?
Foreigners living in our country are obliged to pay tax for immovable property. In this report, we will answer frequently asked questions about foreigner’ income tax payments. Foreigners in Turkey in case of letting of immovable property; have to pay rental income tax. If they make the sale within the first 5 years, his income will be paid as an increased income tax.
📌Rent Income Tax
They pay these taxes in two equal parts, March and July. Although there are minor changes for the year 2020, a simple pricing table is used to calculate the rent tax rate. According to this table:
🔹14,800- 34,000 TL: 15% of revenue.
🔹34.000-80.000 TL: The portion of 34.000 TL will be taxed from 15%. The rest will be taxed at 20%.
🔹Above 80.000 TL: 34.000 TL will be taxed from 15%. From 20% to 34,000-80,000 TL, over 80,000 TL will be taxed 27%.
📌Real Estate Income Tax
This tax, which is known as an increase in value, is the tax paid in case the foreigners sell the real estate they have in our country within 5 years. If it sells after 5 years, it is exempt from tax. They are obliged to pay this income tax within 5 years. This tax is the gain tax on value increase. They have to pay this tax in March and July. Payments are paid in two equal installments as these two months. As the last word, let’s say a few words on the principle of reciprocity that is frequently mentioned in this blog.
What Is The Principle Of Reciprocity?
Reciprocity means that the same situation is applied to a situation.
In the context of the principle of reciprocity, the positive or negative practices are applied to Turkish citizens in foreign countries; the citizens of that country are treated the same way in Turkey. For example, if a foreigner can obtain a property in Turkey; a Turkish citizen should be able to acquire property in that country.
We complete this block by reminding you that we are with you with our technical and legal knowledge in all your buying and selling transactions as Turkish Property Consultancy team and that you can consult us at every step of the process.