Tax on the increase in value from the sale of real estate

Tax on the increase in value from the sale of real estate

Selling Property in Turkey: Navigating Capital Gains Taxes

Many of our clients have inquired about taxes associated with selling property in Turkey. To address these concerns, we’ve prepared a comprehensive guide to help you understand your tax obligations.

Capital Gains Tax Exemption: Holding on for Over 5 Years

The good news: If you’ve owned the property for more than 5 years, you are exempt from paying capital gains taxes on the sale! This means you get to keep the full profit from the sale.

Capital Gains Tax: When Ownership is Less Than 5 Years

However, if you’ve owned the property for less than 5 years, you’ll be subject to a capital gains tax on the increase in value, known as “Değer artış vergisi.”

Tax Based on Purchase and Sale Price Difference

The tax is calculated based on the difference between the official property value stated in the purchase and sale documents. In simpler terms, you only pay tax on the profit you make from the sale.

Example: Calculating Your Tax Liability

Let’s illustrate this with an example. Imagine you’re selling an apartment you purchased for 450,000 TL. The new owner is willing to pay 600,000 TL. The difference, which is 150,000 TL, is the taxable amount.

Factoring in Inflation and Tax Brackets

It’s important to consider inflation during your ownership period. The tax will be calculated with this inflation rate in mind. Here’s a breakdown of the 2023 income tax brackets:

  • Up to 70,000 TL – 15%
  • Up to 150,000 TL – 20%
  • Up to 550,000 TL – 27%
  • Up to 1,900,000 TL – 35%
  • Over 1,900,000 TL – 40%

Using these brackets, calculate your estimated tax liability. Remember, tax laws can change, so staying updated on potential benefits and exemptions is crucial.

Seeking Professional Guidance

Tax obligations can be individual and depend on your specific situation. If you have any questions or need help calculating your tax burden, consider consulting a tax law specialist or a real estate consultant.

We hope this information empowers you to make informed decisions regarding property sales and taxes in Turkey. Feel free to reach out if you have any further questions!

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