Capital Gains Tax in Turkey When Selling Property (2024)
Everything you need to know about Turkey’s Capital Gains Tax (CGT) and how it applies to property sales.
What is Capital Gains Tax (CGT) in Turkey?
Capital Gains Tax in Turkey is a tax levied on the profit earned from selling a property. This tax is separate from stamp duty, which both buyers and sellers pay during a property transaction.
Capital Gains Tax applies if you sell your property within five years of its purchase date. The tax is calculated based on the profit generated from the sale, which is the difference between the property’s declared purchase value and its declared sale value.
Important Note: Properties held for more than five years are exempt from CGT, making long-term ownership a tax-free investment opportunity.
Capital Gains Tax Rates in Turkey (2024)
The updated 2024 CGT rates are as follows:
| Profit Bracket (TRY) | Tax Rate |
|---|---|
| Up to 45,000 TRY | Exempt |
| 45,001 – 70,000 TRY | 15% |
| 70,001 – 180,000 TRY | 25% |
| 180,001 – 600,000 TRY | 27% |
| 600,001 TRY and above | 35% |
Example Case Study (2024):
- Purchase Price: 300,000 TRY.
- Sale Price (within 3 years): 500,000 TRY.
- Profit: 200,000 TRY.
According to the 2024 tax brackets, the profit of 200,000 TRY falls within the 27% tax bracket.
- Tax Payable = 200,000 TRY × 27% = 54,000 TRY.
Pro Tip: Keeping the property for over five years would eliminate this tax entirely.
Avoiding Double Taxation
Turkey has double taxation agreements with numerous countries worldwide, ensuring that you don’t pay tax on the same income in both Turkey and your home country.
For example:
- If you pay 25% CGT in Turkey, you are exempt from paying additional CGT in a country with a double taxation agreement.
To confirm your eligibility, consult a tax advisor familiar with the tax treaty between Turkey and your home country.
Capital Gains Tax Exemptions
- Long-Term Ownership (5+ Years)
- Properties owned for more than five years are exempt from CGT, encouraging long-term investment.
- Property Owned by a Business
- If the property is purchased and sold through a business operating in Turkey, the profit is treated as business income rather than a capital gain, subject to corporate tax rates instead.
- No Profit Realized
- If there is no profit from the property sale, CGT does not apply.
How is the Tax Paid?
Declaration Process:
- The seller must declare the profit during the annual tax filing period.
Payment Deadline:
- CGT is typically due in two installments:
- First Payment: March.
- Second Payment: July.
Required Documents:
- Title deed (TAPU).
- Proof of purchase and sale values.
- Bank transaction records for payments.
Examples of CGT Across the Globe
- United Kingdom: CGT on property profits is 18–28%, depending on income.
- United States: CGT is 15–20%, with an exemption of up to $250,000 for primary residences.
- France: CGT starts at 19%, with additional surtaxes for higher profits.
Compared to many other countries, Turkey’s CGT is competitive, especially with its 5-year exemption rule.
Stamp Duty (Updated 2024)
In addition to CGT, buyers and sellers must pay stamp duty during the title deed transfer.
- Rate: 4% of the declared sale value.
- Payment Responsibility: Typically split between the buyer and seller, but this can vary depending on negotiation.
Example for 2024 Stamp Duty:
- Declared Sale Price: 1,000,000 TRY.
- Stamp Duty: 4% × 1,000,000 TRY = 40,000 TRY.
If split equally:
- Buyer pays: 20,000 TRY.
- Seller pays: 20,000 TRY.
Strategies to Minimize CGT in Turkey
Hold Property for Over Five Years
- Selling after five years eliminates CGT.
Accurate Declarations
- Ensure declared purchase and sale values align with market rates to avoid penalties or audits.
Business Ownership
- Consider purchasing property through a business entity to treat profits as regular income instead of capital gains.
Legal and Tax Advisory
- Work with legal and tax professionals to navigate regulations and optimize tax liabilities.
Impact of CGT on Property Investment in Turkey
Despite the CGT implications for short-term sales, Turkey remains an attractive destination for real estate investors due to:
- High appreciation rates in metropolitan areas like Istanbul and coastal cities like Bodrum, Antalya, and Izmir.
- The Citizenship by Investment Program, which exempts properties purchased for citizenship purposes from CGT if held for the mandatory three-year period.
- The 5-year exemption rule, encouraging long-term investments.
Conclusion: Plan Ahead to Maximize Your Returns
Capital Gains Tax is an essential consideration when selling property in Turkey. By understanding the tax brackets, exemptions, and strategies to reduce your liability, you can make informed decisions and maximize your investment returns.
For detailed advice and personalized support, contact us today to navigate the Turkish property market with confidence.
