Turkey has a unique appeal for foreign investors in the real estate sector thanks to its strategic location, thriving markets, and residency or citizenship programs through investment. However, it is essential to understand the tax framework related to purchasing and owning property to avoid surprises and ensure a successful, sustainable investment.

1. Title Deed Tax (Purchase Tax)

The property transfer tax is approximately 4% of the property’s value.

Legally, both buyer and seller must share the payment equally (2% each), but in practice, buyers usually bear the full amount.

2. Value Added Tax (VAT) on Purchase

VAT varies depending on the type and size of the property:

• 1% for residential units under 150 sqm
• 8% for residential units larger than 150 sqm
• 18% for commercial properties

Foreign investors can be exempted from VAT when buying a new property directly from the developer, provided that:

• Payment is made in foreign currency
• The buyer has not resided in Turkey in the last 12 months
• The property is not sold within 12 months of purchase (otherwise VAT applies)

3. Annual Property Tax (Emlak Vergisi)

Calculated annually based on the municipality’s assessed value (usually lower than market value).

Rates:

• Residential: 0.1% – 0.2% (up to 0.2% in metropolitan cities)
• Commercial: 0.2% – 0.4%
• Land: 0.1% – 0.3% (doubled in metropolitan cities)

Payment deadlines: Two installments: May and November.

Late penalties: Around 4.5% monthly compound interest.

4. Valuable Housing Tax

Applies to residential properties exceeding the assessed threshold for 2025 (around 15,709,000 TRY).

Progressive rates:

• 3% for values between 15.7M – 23.6M TRY
• 6% for values up to 31.4M TRY
• 0% for amounts exceeding that

Paid in two installments: February and August.

5. Capital Gains Tax on Sale

If you sell your property within 5 years of purchase:

• A tax of 15% – 35% applies on the net profit depending on the amount.
• The purchase price can be adjusted for inflation (PPI), reducing or eliminating tax.
• If owned for more than 5 years: No capital gains tax applies.

6. Rental Income Tax

Rental income is subject to a progressive income tax rate of up to 40%.

Maintenance and insurance expenses can be deducted to reduce taxable income.

7. Inheritance and Gift Tax

Applied progressively between 1% – 30% depending on the relationship between heir and deceased, and the property’s value.

Special exemptions apply for spouses and children (e.g., the 2025 exemption threshold is 1,000,000 TRY).

Additional Rules for Foreign Investors

• Foreigners are generally subject to the same real estate taxes as Turkish citizens.
• Land purchase restrictions: foreigners cannot buy more than 25,000 sqm without special permission, and purchases are not allowed in villages or military zones.
• No major changes have been introduced in 2025, though adjustments remain possible depending on government policy.

Final Recommendations for Investors

• Consult a local tax advisor to ensure compliance based on property type and city.
• Allocate a budget for indirect costs (title deed, registration, annual property tax).
• If seeking VAT exemption, carefully check eligibility (foreign currency, residency status, and new property condition).
• Consider long-term ownership (5+ years) to avoid heavy capital gains tax.