Capital Gains Tax in Turkey 2021

What is the capital gains tax in Turkey?

Property in Turkey is not only purchased as a residential place of your own or perhaps with commercial intent, but property in Turkey is also a great investment tool.

However, the only way to realise these capital applications is when you sell the property. So, if you have decided to sell your property, you need to aware of all the legal requirements, procedures as well as taxes that will occur upon the sale. 

Capital gains tax is one of those taxes that you might be subject to so please do read this guide carefully to avoid having problems and as you are realising your profits in the Turkish property market. 

What you need to be aware of is the fact that if you are selling the property within the five years of your purchase date, you will be subject to paying capital gains tax in Turkey.

You can check the date of your purchase on your title deed as the date of your initial purchase of the property will be written there. 

  • Please note that there are some exemptions from the capital gains tax rate as well as exemption from income tax in Turkey such as if you have acquired the house through inheritance, you will not be subject tax such as the capital gains tax even if the holding period of the property has been less than 5 years. 

Some of our clients previously confused the capital gains tax in Turkey with stamp duty which is %2.2 and legally both buyer and the seller must pay upon the transaction of the ownership of the property, although due to Turkish business customs the buyer pays the entirety of this tax. However, details regarding this stamp duty tax are beyond the scope of this guide.

How to calculate capital gains tax in Turkey?

If you are looking to calculate the amount of capital appreciation tax that you will be subject to upon the sale of your property you need to be aware of the calculation method as well as its components.

To calculate the capital gains tax in Turkey you will need data from the TUIK which stands for the Turkish Statistical Institute. The calculations require YI-UFE data which is a domestic producer price index which is a component date for inflation calculations.

You will be required to get 2 numbers from the YI-UFE list and they have to be the value of the previous month of your purchase as well as prior month to date of the immovable property sale. 

After acquiring these numbers, you will need to calculate the price of purchase relative to today’s economic outlook. Once you have acquired this number you will deduct a value called exceptional value which is announced every year by the Turkish government.

From that number, you will be able to identify which tax band you fall in to and the amount of capital appreciation tax you need to pay will be apparent. 

  • We certainly understand how complex data acquiring as well as the calculation can be. Real estate taxes are a serious topic and a requirement everyone needs to obey. At Kingsman Estates we handle every step of the buying and selling process for our clients, so they have the ease of mind as they are navigating through the Turkish real estate market. 

Example Calculation regarding capital gains tax in Turkey

Let’s say you have purchased a property on the 01/06/2016 for 200.000 Turkish lira and you are willing to sell it on 01/03/2020 for 400,000 Turkish lira. 

So now you will need to acquire the previously discussed YI-UFE values for the previous month of both sale and purchase date from the Statistical Institute of Turkey which will be May 2016 for the purchase date and February 2020. 

  • May 2016 YI-UFE: 256,21
  • February 2020 YI-UFE: 464,64

200,000(purchase price) x ((464,64 / 256,21) = 362.702 Turkish lira (updated value of the property)

You will now need to take out the number we have just found from the sale price of the property.

400.000 (sale price of the property) – 362.702 (updated value of the property) = 37.298 TL

We will now deduct the exceptional value from 37.298 TL. The exceptional value was announced at 18,000 TL in 2020 and it is not 19,000 TL in 2021. To get an updated list of the exceptional value from the Revenue Administration, click here. 

37.298 – 18.000 (exceptional value) = 19.298 TL

We will now decide which band of business income tax our property purchase falls in to and therefore determine the amount of tax we are required to pay. 

Income Bands 2020 and 2021 as it has not changed. 

Up to 22.000 TL: %15 tax

For 49.000 TL: 3,300 TL tax needs to be paid for the 22.000 TL and %15 per cent from the remaining value

For 120.000 TL: 8,700 TL tax needs to be paid for the 49.000 and %20 from the remaining value 

For 600.000 TL:27,870 TL needs to be paid for the 120.000 T and %35 from the remaining value

Above 600.000 TL: 195.870 TL needs to be paid for the 600.000 TL and %40 from the remaining value

To finalize our calculation;

19.298 x %15 = 2.894 TL is the total amount of capital appreciation tax we are required to pay from the sale of our property located in Turkey. 

Again, we understand how complicated this calculation can be however please do not worry as our team at Kingsman Estates investor centre are more than capable and they will let you know how much needs to be paid and when. 

When shall I pay my capital appreciation tax in Turkey?

The capital appreciation tax that sellers who have do not hold on to their property usually gets paid either in March or July after the title deed transfer. There are instalments available so you may choose to pay in 2 separate occasions.

The dates and methods of payments are subject to change so if you want to be fully up to date regarding this issue please head on to the Revenue Administration website where you will be able to find all sorts of information you might need or alternatively call 00 90 444 0 189. 

 Now you know how capital gains tax in Turkey calculated in 2021, if you are interested in buying or selling property in Turkey, please contact us by either sending us an email or start a direct chat with us on the right-hand side of our website and our dedicated team at Kingsman Estates investor centre will be more than happy to help you with all your needs. 

Kingsman Estates is a boutique professional licenced Turkish real estate agent concentrating on international investors to entre to the Turkish property market or diversify their current portfolio.

We handle everything from start to finish so our clients have an ease of mind knowing that they have the best representation as they are navigating through the Turkish property market.

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