The article in summary: This important article explains how to calculate the profit tax after buying a property in Turkey, then the desire to sell it before passing five years of the date of receiving the title deed.
According to Article 80 of the Turkish Income Tax law, in the case of selling the property before passing five years of the date of purchase, then it will be a subject to the property profits tax (for properties purchased under construction, the beginning of the five-year duration starts from the date of receipt of the title deed), and are excluded from the tax if the purchased property was obtained with nothing in return (free of charge i.e., by inheritance or donation or something like that, they are not subject to the mentioned tax.
The value of the real estate profits is calculated in accordance with the local PPI, as this indicator is issued monthly, then the value of real estate profits account will be done not by monthly index on which the property was sold; but the real estate profits are calculated according to the previous month indicator, to clarity more i can give a simple example:
Let’s say that a housing units was sold in 02.01.2010 at a price of 120,000 liras, and it was sold at 01.03.2014 amount of 200,000 liras, and the increasing ratio of the local PP as the following:
- 02. 2010 = 232,27
- 2010. 03 = 166،22
The Tax Calculation is as the following:
The price of the property in Turkey is multiplied by the rise rate of the local producers price's index (inflation rate), in which the rise rate of the local producers price's index is obtained by the price’s rise index ratio in the month before the property was sold on the price’s rise index ratio in the month before buying the property, and this rate is multiplied with the property purchase price to get the real price for the property’s purchase (the purchase price by the currency's value in the date of sale).
120000x (232,57 / 166,52) = 167597 Liras the real price of the property (the purchase price of the property by the value of the currency today), then we subtract the real purchase price of the sale price, we get the real profit of the property, which is defined in terms of tax expressions the pre-exemption .200000 - 167,959 = 32,041 Liras, the real profit.
According to Article 81 of the tax law, the taxes and fees and expenses of the sale like the outlays paid by the seller in the real estate department (Title deed) is subtracted from the real price with a ratio of %2, and the like.
32041 - 4000 = 28041 Liras, in this way, we have got the subtracted tax (the basic value to determine the amount of tax), we subtract from the subtracted tax; the exemptions of the profits determined by the revenue department every year. Consequently, we've got the basic taxable value.
The tax exemptions of the real estate profits are as the following:
As the sales process, has been achieved in 2014, we subtract from the subtracted tax; the value of exemption in 2014, which is 9700 Liras, to get the basic taxable value 28041 - 9700 = 18,341 Liras, the taxable value, and the tax is subtracted from value taxable value according to the following tax segments:
Annual income tax segments for 2016:
Less than 12,600 Liras
From 12,600 to 30,000 Liras
From 30,000 to 69,000 Liras
More than 69,000 Liras
According to the tax segments for 2014, the tax imposed on (18341) liras, is (3073), and the announcement of this amount is in the period between 1-25 March 2014 with the annual income tax statement, and are repaid with two equal installments in March and July of the same year.