When purchasing a new house in Turkey, it’s essential to be aware of the taxes that will apply. These taxes are a critical part of the home-buying process and can vary based on the property’s value and location. In this guide, we answer frequently asked questions about the taxes involved in buying a house in Turkey and provide insights on how to manage these costs.
Is Tax Paid When Buying a House in Turkey?
Yes, when buying a house in Turkey, certain taxes must be paid during the transfer of the title deed. These taxes are typically the responsibility of the buyer and are required at the time of purchase.
What Percentage of Tax Is Paid When Buying a House?
The percentage of taxes paid when buying a house in Turkey can vary based on several factors, including the value and location of the property. The main taxes include:
- Title Deed Fee (TAPU): This tax is 6% of the property’s declared value (as of July 2023) and is paid at the time of the title deed transfer.
- Value Added Tax (VAT): This tax applies to newly built or unsold real estate. The VAT rate can range from 1% to 20%, depending on the property type and location.
- Stamp Duty: This tax is 0.948% of the property’s value and is paid for the promise of sale contracts and deed transfer transactions.
- Revolving Fund Fee: A tax collected at a rate of 1% of the property’s declared value.
How to Pay Taxes in Turkey as a Foreigner?
Foreigners purchasing property in Turkey can pay their taxes in cash or via bank transfer. Many foreigners open a Turkish bank account before buying property to facilitate the payment of taxes and other financial obligations.
How Is the Annual Property Tax Calculated in Turkey?
Annual property tax in Turkey is calculated based on the property’s value and the size of the city where it is located. For example, in larger cities like Istanbul, the annual property tax is 0.2% of the residential property’s total value. This tax is mandatory and is typically used to fund local government services such as street maintenance and public gardens.
Is There a VAT Exemption for Foreign Real Estate Buyers?
Yes, the Turkish government offers VAT exemptions to foreign buyers as an incentive for real estate investment. To qualify for this exemption, you must meet certain criteria, such as not having permanent residency in Turkey and buying property without the intent of resale within a year.
What Are the Current Value Added Tax Rates?
Value Added Tax (VAT) in Turkey is only applicable to new properties purchased directly from developers. The rates vary:
- Residential Properties: Typically 1% to 10%, depending on the location and type of property.
- Commercial Properties: Rates can go up to 20%.
Recent Changes in Tax Rates
As of July 10, 2023, significant changes were made to VAT rates in Turkey:
- General VAT Rate: Increased from 18% to 20%.
- Reduced VAT Rate: Increased from 8% to 10%.
- Title Deed Fee: Increased from 4% to 6%.
Conclusion
Taxes are an integral part of the home-buying process in Turkey. Understanding the various taxes—such as the title deed fee, VAT, stamp duty, and revolving fund fee—is essential to avoid surprises during your property purchase. As tax rates and regulations may change over time, staying informed and consulting with a local expert is crucial for a smooth home-buying experience in Turkey.
If you need guidance on buying property in Turkey or have questions about the tax obligations, Aegean Locations is here to help you every step of the way. Contact us today to make your dream of owning a home in Turkey a reality.