Turkey Capital Gains Tax when selling property
Not to be confused with the 2.2% stamp duty that the buyer and seller must equally pay when a property in Turkey is sold, capital gains tax on the sale of your Turkish property is something entirely different.
If you decide that you want to sell your property in Turkey within five years of the original purchase date – we recommend checking the date on the Turkish title deed (TAPU) if you are not sure – then you will have to pay tax on the sale of the property depending on how much profit is made from the sale. This tax is known as the Turkish Capital Gains Tax and the amount payable will be calculated by subtracting the declared original purchase value of the property from the declared sales value of the home – the amount of profit made from the sale, is the amount which will be taxed.
Sample rates of capital gains tax on the sale of a Turkish property
This rate is structured similarly to the income tax rates, but with different amounts:
Profit less than 6,000 Turkish Lira, there is no CGT
Profit between 6,000 Lira and 7,000 Lira, the CGT is 15%
Profit between 7,000 Lira and 18,00 Lira, the rate is 25%
Profit between 18,000 Lira and 40,000 Lira, the rate is 27%
Profit any amount over 40,000 Lira, the tax rate is 35%
Example case study:
Example: if you bought a home in Turkey for 200,000 Lira and two years later you decided that you wanted to sell the home. Naturally, the home has appreciated in value and you sell the property for 217,000 Lira. Because you sold the home less than five years after buying it, you will be subjected to tax on the profit of the home. Because you made 17,000 Lira in profit, you will have to pay 25% tax rate. These taxes must be paid, regardless of what nationality you are or whether you are a Turkish resident or non-resident.
Do you have to pay double tax in your home country?
One positive thing about Turkey, is that Turkey has a good taxation policy record with numerous countries around the world. This means that you should be able to avoid the double taxation rule, meaning that if you pay the 25% taxes on your profit in Turkey, you won’t be subjected to tax payable when you take the money back to your home country.
Buying a property through a business in Turkey:
Another noteworthy mention, is that if you buy a property in Turkey through a business which you run in Turkey, you won’t be subjected to Capital Gains Tax as it is considered part of normal business income and is taxed accordingly as a part of your business in Turkey.
Buying a brand new home in Turkey:
If you buy a home in Turkey that is brand new, then the rules are slightly different. Once you have bought a brand new home in Turkey, you have up to one year from the date on the TAPU (title deed) in which you can sell your home and not be subjected to paying tax. However once that first year is up, you are then subjected to tax if you sell the home within five years.
Overall, the Turkish Capital Gains tax works very similarly to other countries around the world. So this shouldn’t come as much of a surprise to anyone who already owns a property in another country. Remember, if you hold on to your property for five plus years, you won’t have to pay tax on the profit and this can help you secure a maximum return on your original investment in Turkish property.
If you have any other questions regarding this or matters similar to this, don’t hesitate to give us a call or contact us and we will be happy to advise and assist you accordingly.