Owner taxes in Turkey: the purchase charge, the annual tax and letting

The Turkish tax burden on a homeowner is low by European standards, but it has features that change the calculation: some charges are computed on cadastral value rather than on the transaction price, and there is a relief written specifically for the foreign buyer.

At purchase: the transfer charge

The main transaction payment is the TAPU registration charge, a percentage of the declared value. Formally it is split between seller and buyer; in practice it is more often paid by the buyer in full — that is a matter of agreement and is recorded in writing.

• The base cannot be below cadastral value. Understating the contract price is limited from below by the municipality's official valuation.
• The mandatory valuer's report on a transaction with a foreigner makes understating even less sensible.
• An understated price increases the tax on sale — on exit, the difference between the sale price and the declared purchase price becomes your taxable base.

VAT exemption for a foreign buyer

Turkey exempts from VAT the first sale of residential or commercial property to a foreign buyer bringing currency in from abroad. The conditions are strict: the property is acquired for the first time from a developer, payment arrives in foreign currency from outside the country, and the property cannot be sold within a set period — otherwise the exemption is lost and the tax is assessed with interest.

The annual property tax

The rate depends on the type of property and on the status of the city: municipalities with metropolitan status charge more than ordinary ones. The tax is calculated on cadastral value and is generally paid in two instalments a year. A small contribution to the cultural heritage fund is levied in addition.

A separate line is the tax on high-value housing: properties whose cadastral value exceeds a set threshold are taxed on a progressive scale on top of the ordinary tax.

Letting

Rental income is subject to income tax on a progressive scale, with an annually indexed exempt amount for residential letting. Expenses are deducted either on documented actuals or on a simplified fixed percentage — the choice is made once for the year and applies to all of the taxpayer's property.

What to keep in view

• Cadastral value, not the contract price, drives several of these charges — establish it before budgeting.
• The VAT exemption has a holding period attached. Selling early is expensive.
• Currency matters more than rates here: the lira's depreciation can make a nominally profitable holding a loss in dollars.