Property Gains Tax in Turkey
2024-02-15
40,587 Views
Summary: This exceptional article explains how to calculate the Gains tax when you buy a real estate in Turkey and then sell it before passing five years on the date of the Land Registry receipt.
Introduction to the Property Gain tax in Turkey
According to the Article No. 80 pertaining to the Turkish Income Tax Law, in the case of sale of a real estate before passing five years on the date of purchasing, the real estate subjects to capital gains tax on property (for the real estates purchased under construction, the beginning of the five-year is from the date of the receipt of the Land Registry), excluded from this gains tax the sold real estates which have been obtained free of charge, namely, by inheritance, donation, or something like that, in that case the real estate is not subject to the foregoing tax.
The value of property gains tax is calculated according to the Local Producer Price Index. However, this indicator is issued monthly and for that, the value of capital gains tax on property is not calculated according to the month index on which the real estate is sold; it is calculated according to the previous month index, here is a simple example to clarify things out:
Let’s say that a real estate was bought in 01/01/2020 at a price of 850000 Turkish Lira, and then sold in 01/01/2024 at a price of 7800000 Turkish Lira, while the Local Producer Price Index proportion of rising was as follows:
- 2020 = 454،08،
- 2024 = 2915،02،
How to Calculate the Property Gain tax in Turkey?
Multiply the price of purchasing of the real estate in Turkey by the proportion of the rate of rising of the Local Producer Price Index (Rate of Inflation). The rate of rising of the Local Producer Price Index can be gotten by dividing the proportion of rising of the price index in the month before the sale of the real estate to the proportion of rising of the price index in the month before buying the real estate. Then multiply this rate by the price of purchasing of the real estate to get the actual price of buying the real estate (price of purchasing of the currency in the date of sale).
850000x (2915,02/454,08) = 5456675 Turkish Lira the actual price of the real estate (the price of purchasing of the real estate of the currency of the current day). Then subtract the actual price of purchasing from the sale price to get the actual profit of the real estate, which is defined in terms of taxes as "the earnings before tax."
7800000 - 5456675 = 2343325 Turkish Lira, the actual profit.
According to Article No. 81 pertaining to the tax law, taxes, fees, and selling expenses, like the expenses paid by the seller in the land registry department, for example, all ought to be subtracted from the actual profit which is about 2% or something like that.
2343325 - 17000 =2326325 Turkish Lira. By this, we can get the tax bracket (the basic value to determine the amount of tax).
Subtract the tax write–off of the gains, which are determined by the Income Tax Department every year, from the tax bracket to get the basic taxable value.
Tax Exemption of Capital Gains on Property in Turkey
2024
|
2023
|
2022
|
2021
|
2020
|
2019
|
2018
|
2017
|
2016
|
87000
Turkish Lira
|
55000
Turkish Lira
|
25000 Turkish Lira
|
19000
Turkish Lira
|
18000
Turkish Lira
|
14800
Turkish Lira
|
12000
Turkish Lira
|
11000
Turkish Lira
|
11000
Turkish
Lira
|
Having the sale process made in 2024, subtract the exemption adopted in 2024, which is 87000 Turkish lira, from the tax bracket to get the basic taxable value.
The tax is deducted from the taxable value according to the following assessment role lists:
Individual Income Tax Rates Table in Turkey 2024
More than 3.000.000 Turkish Lira
|
From 870.000 to 3.000.000 Turkish Lira |
From 230.000 to 870.000 Turkish Lira
|
From 110.000 to 230.000 Turkish Lira
|
Less than 110.000 Turkish Lira
|
40%
|
%35
|
27%
|
20%
|
15%
|
According to the assessment role lists for 2024, the tax levied on (2239325) Turkish lira is (715764). This amount is announced in the period from March 1st to 25th2024 with the annual income tax statement, and it must be paid in two equal installments in March and July of the same year.