As Turkey continues to attract foreign investment, the Turkish government has introduced several new legislative tax reforms. These tax reforms are aimed at modernising policy, increasing transparency, and long-term investor confidence.
According to data released from the Turkish Statistical Institute (TUIK), foreigners purchased 41,000 properties in Turkey in 2024, with Istanbul, Antalya, Bodrum, and Fethiye leading as top destinations for foreign investment.
For international buyers, it is essential to understand these new changes in order to avoid any surprises and to optimise returns. In this guide, we explain the latest Property Tax reforms in Turkey in 2025.
1. Valuation-Based Property Tax System
One of the most important changes is the move from municipal values towards a current market valuation Property Tax system. Municipal values, often up to 60% below market value, are being gradually phased out across the country. Full implementation is targeted for the end of 2025.
Annual property tax rates in Turkey:
- 0.2% for residential property in metropolitan areas.
- 0.4% for commercial property in metropolitan areas.
- 0.6% for land plots located in metropolitan areas.
This new system will bring fairness and align Turkey with global standards. Annual Property Tax payments in popular cities such as Istanbul, Bodrum, and Antalya may increase because of this change.
Example: A home valued in 2024 at TRY 1 million for tax purposes, may now be valued at TRY 2.5 million. This would increase annual taxes for the owner to pay.
2. Rental Income Tax Regulation
New regulations mean that Turkish real estate investors looking to rent out their property on a long-term or short-term basis via Airbnb must now register with the tax office, open a bank account, and file annual returns.
Rental income tax rates for individuals:
- Up to TRY 110,000: 15%
- TRY 110,000 to TRY 230,000: 20%
- TRY 230,000 to TRY 580,000: 27%
- TRY 580,000 to TRY 3,000,000: 35%
- Over TRY 3,000,000: 40%
Subject to annual updates, an exemption of TRY 47,000 applies to rental income for individual taxpayers. Turkey allows for numerous deductions for foreign investors, including: mortgage interest, maintenance fees, repair expenses, property management fees, insurance premiums, and agent commissions.
Rental contracts need official registration with local authorities, and traceable banking systems must be used for receiving payments. Digital documentation needs to be accurate and updated for defending claims in case of audits.
3. VAT Exemptions Still Apply for Foreigners
As of 2025, foreign nationals benefit from VAT exemption when buying new-build properties in Turkey. This represents a substantial saving as standard VAT on residential property in Turkey is currently set at 18%. The following conditions need to be fulfilled by the buyer to save on VAT:
- Must not have lived in Turkey in the past 12 months.
- The property purchase must be in a foreign currency.
- Must not sell within 12 months or VAT becomes payable.
4. Inheritance and Capital Gains Tax
Inheritance tax rates in Turkey currently range from 1% up to 30%. The tax-free threshold for spouses and children has increased in 2025 to TRY 1,000,000 per heir. For non-relatives, the exemption threshold is a lot lower.
If you sell a property within five years of buying it, capital gains tax is applicable at progressive rates from 15% up to 40%. If you hold a property for more than five years and then sell it, no capital gains tax is paid. The purchase price can be adjusted using the domestic Producer Price Index (PPI).
Example: A property bought in 2020 for TRY 1 million and sold in 2025 for TRY 2 million may have its base price adjusted by up to 100% for inflation. Depending on PPI, the capital gain could be eliminated, and no tax would be payable.
5. Transparency and Compliance
Turkey is improving international cooperation and transparency in order to align with OECD and FATF recommendations. Aimed to protect the rights of investors and improve legal certainty, the government’s digitalisation will impact foreign investors in numerous ways:
- Digital Title Deeds (Web-Tapu): Transactions can be completed online, reducing fraud and improving overall speed.
- Property Identification Numbers (PINs): Properties are now traceable through a centralised database, making title checks easier.
- Revenue Administration Integration (GIB): Property records and tax declarations can be linked automatically, reducing mistakes.
6. Implications for Turkish Citizenship by Investment
Citizenship by Investment (CBI) in Turkey remains one of the world’s most popular and attractive programs for investors. In 2022, the threshold for real estate investment was increased to $400,000 USD. New tax reforms do not change that, but do impact overall cost calculations in the following ways:
- The property must be held and not sold for a minimum of 3 years.
- Capital gains tax will apply if sold within 5 years and a gain is made.
- VAT exemptions can be applied on qualifying new-build properties.
Ten Tips for Foreign Investors
1. Verify the licenses of estate agents and developers through official registries while avoiding unlicensed agents.
2. Opening a Turkish bank account enables smoother transactions and serves as a requirement for multiple official procedures.
3. The Turkish Tax ID (Vergi Numarası) necessary for property registration, utility setup, and rental income declaration.
4. The GİB online tax system serves as a platform for Turkey's Revenue Administration (Gelir İdaresi Başkanlığı) to receive returns.
5. Use bilingual legal representation because a lawyer who speaks English and Turkish can efficiently review Title Deeds and contract clauses.
6. The Title Deed search verifies that the property remains free from outstanding debts, liens, and zoning violations.
7. Stay updated on bilateral tax treaties including the UK–Turkey Double Taxation Agreement enables tax relief and prevents double taxation.
8. A local Turkish accountant can handle your annual tax filings and rental income compliance through their services.
9. Detailed property records must include documentation of all expenses, rental agreements, and sale transaction details.
10. Plan for exit strategies and consider the optimum timing for capital gains exemptions and transfer of funds back home.
A Smarter, More Transparent Real Estate Market
Designed to ensure overall fairness, attract new foreign investment, and align Turkish regulations with international standards, Turkey’s property tax reforms represent an important moment for the real estate sector. Despite rising taxes for some owners, the benefits: greater legal certainty, transparency, and market stability, continue to make Turkey a top destination in 2025 and beyond.
Looking for more information? Contact Property Turkey today for a free consultation – our local tax advisors are happy to answer all of your questions about property taxes and assist you in planning the right investment for your budget and requirements.
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