Renting a property in Turkey generates income that is taxed in this nation. Whether they are foreigners or not, those who acquire a home must think about paying the necessary taxes. Property tax in Turkey can be tough to understand, especially if you purchase a property in another nation. Aside from the taxes, you pay when you invest in Turkey, there are other taxes to consider, such as yearly taxes and VAT.
Purchasing Tax (Title Deed Fee)
When you buy a property in Turkey, you need to receive a title deed along with a charge of 4% of the purchase price. This sum is usually divided in half and split between the buyer and seller. However, depending on the terms of the agreement, you may be obligated to pay the entire amount as the buyer or vice versa, according to the investment law in Turkey.
VAT (Value Added Tax)
With a few exceptions, purchasing property in Turkey requires the payment of VAT. Thus, an 18% VAT is levied on commercial buildings. However, this tax differs when it comes to residential homes. In this scenario, consider the following two examples:
The VAT rate for flats larger than 150 square meters is 18%.
The VAT rate for apartments with a floor space of less than 150 square meters is 1%.
It is vital to know that in Turkey, rental properties are free from VAT. Individuals who sell their properties receive the same advantage. However, the situation changes if a real estate agency handles the sale and purchase. The VAT rate in this country is fixed at 1%.