Foreigners who purchase a house in Turkey are subject to various taxes as stipulated by Turkish tax regulations. These taxes are designed to ensure compliance with the country’s tax laws and to generate revenue for the government. It is essential for foreign buyers to understand these tax obligations to avoid any legal or financial complications.
Mandatory Taxes for Foreigners Buying a House in Turkey
Title Deed Transfer Fees
Title deed fees also known as registration fees, are charges incurred during property ownership transfers. They cover administrative costs for registering the property under the new owner’s name. The fee is a percentage of the property’s value and varies by region. The fee applies to any real estate, regardless of the buyer’s status.
Value-added Tax (VAT)
Value-added tax is applicable to the sale of newly constructed residential properties in Turkey. Foreign buyers may be subject to VAT, which is currently set at a standard rate of 18%. However, there are certain conditions and exemptions that may apply, such as when purchasing a property as a residence rather than an investment.
Notice:
As previously established by the Council of Ministers Decree, the Value Added Tax (VAT) rates were as follows:
- 1% for residential properties with an area of less than 150 m²,
- 8% for residential properties with an area of more than 150 m²,
- 18% for commercial properties.
However, with the enactment of Presidential Decree No. 7346, certain changes have been made to the VAT rates. The general VAT rate has been increased from 18% to 20%, while the reduced VAT rate of 8% has been raised to 10%.
> As of 10.07.2023, with the Presidential Decision, numbered 7346 dated 07.07.2023,
- The VAT rate, which was 8%, will increase to 10%.
- The VAT rate, which was 18%, will increase to 20%.
- The title deed fee, which was 4% in property sales, has been increased to 6%.
Annual Property Tax
Annual property tax, also known as real estate tax, is an ongoing tax levied on property owners in Turkey. Foreign owners pay this tax annually, determined by property declared value and local tax rates. The tax is additional to the Turkish government. Real estate in Turkey varies based on city size and property type.
Stamp Duty
Stamp duty is a government tax on legal documents, such as property purchase contracts and agreements. Foreign buyers are required to pay a percentage of the contract value, which may vary depending on the transaction’s nature and value. In Turkey, the stamp duty rate is 0.1 to 0.6% of the contract value.
Government Fees and Other Expenses:
During the acquisition and sale of real estate, various fees and charges are paid to the land register office and other governmental organizations. These are common expenses that foreign buyers will encounter while making a purchase.
Understanding these taxes and their implications is crucial for foreign buyers planning to invest in Turkish real estate. It is recommended to consult with tax professionals or seek legal advice to ensure compliance with the tax regulations and to accurately estimate the total cost of property acquisition in Turkey.
Main Taxes Applied to Foreign Investors
The taxes that foreigners who buy a house in Turkey have to pay include liabilities that arise both at the time of purchase and at the time of sale. Taxes such as title deed and VAT are paid at the purchase stage, while real estate sales gain tax is paid at the time of sale. Here are some important points that foreigners should not forget:
- Expert Advice: Buying and selling houses in Turkey can be complex. Foreign investors, it is important to get help from an expert lawyer or real estate consultant in this process. Thus, they can have accurate information about tax liabilities and other legal issues.
- Tax Agreements: Turkey has signed various tax agreements with various countries to avoid double taxation. Foreign investors can benefit from tax advantages by examining the tax agreements between their countries and Turkey.
- Purpose of Real Estate: Foreign investors should consider how they will use the real estate they buy in Turkey. If their purpose is to use the property for holiday purposes only, they may benefit from tax advantages under certain conditions.
As a result, foreigners who buy a house in Turkey are subject to taxes such as title deed, VAT, and real estate sales income tax. Therefore, investors should properly understand their tax obligations and seek support from experts. Every investor’s situation may be different, so accurate information and planning are paramount.
