Valuable Housing Tax in Turkey: A Comprehensive Guide - 2025
Capital gains tax in Turkey applies to profits from selling assets like real estate, stocks, and other investments. The tax is calculated based on the difference between the purchase price (cost basis) and the selling price of the asset. Whether you are a local resident or a foreign investor, understanding how this tax works is essential. This guide provides you an extensive information about capital gains tax in Turkey regulations.
What is Capital Gains Tax in Turkey?
Capital gains tax is charged on profits made from selling assets that have appreciated in value, such as property, stocks, or other investments. In Turkey, this tax is imposed on both resident and non-resident individuals and businesses alike. The rules can differ depending on the type of asset sold and the holding period.
Taxable Assets on Capital Gains Tax in Turkey
The Capital Gains Tax in Turkey applies to the following income and profits:
- Real Estate (Property Sales)
- Lands
- Buildings
- Flats
- Mines
- Shares of Ship
- Intellectual property rights
- Stocks and Shares
How is Capital Gains Tax Calculated in Turkey?
The formula for calculating Capital Gains Tax is straightforward:
Taxable Gain = Selling Price – (Purchase Price + Allowable Expenses)
- Selling Price: The amount received from the sale of the asset.
- Purchase Price: The original cost of acquiring the asset.
- Allowable Expenses: Costs such as renovation, maintenance, and legal fees related to the asset.
Once the taxable gain is determined, the applicable tax rate is applied.
Capital Gains Tax Rates in Turkey
- Real Estate (Property Sales):
- If you sell a property within 5 years of purchase, the gain is taxed at rates ranging from 15% to 40%.
- No tax is applied if the property is sold after 5 years of ownership.
- Stocks and Shares:
- No capital gains tax is charged on profits from selling shares and bonds, provided they have been held for over one year.
- If the holding period is less than a year, the profits are subject to tax at rates based on your total income.
- Other Assets:
- Profits from the sale of businesses or intellectual property are taxed as regular income, with tax rates depending on your income level.
Exemptions from Capital Gains Tax
Several exemptions can reduce or eliminate capital gains tax:
- Amount Exemption: A certain amount of capital gains from the sale of real estate is exempt from tax.This amount is TRY 87,000 for 2024 and is determined annually.
- Shares Exemption: As mentioned, capital gains from shares held for over a year are generally exempt from tax.
- Double Taxation Treaties: Turkey has agreements with many countries to prevent double taxation. If you're a foreign investor, these treaties may reduce or eliminate CGT on certain assets.
Filing and Paying Capital Gains Tax in Turkey
- Filing: You must report your capital gains on your annual income tax return. The income tax return is due each year by March 31st.
- Payment: Taxes are generally paid in two installments: March and July.
- Foreigners and non-residents are required to declare and pay the income they earn from the sale of real estate through a special declaration within 15 days from the date of sale.
Tips to Reduce Capital Gains Tax in Turkey
1- Hold Assets Longer: Hold real estate for 5 years and stocks for more than one year to qualify for exemptions.
2- Take Advantage of Exemptions:Use exemptions such as the primary residence exemption to reduce your tax bill.
3- Tax Planning:Consider strategic investments that are tax-efficient, such as government bonds or other exempt assets.
4- Use Inflation Adjustment: Adjust the purchase price for inflation to reduce taxable gains.
5- Leverage Tax Treaties: Non-residents should check if their home country has a tax treaty with Turkey to avoid double taxation.
6- Consult a Tax Advisor: Seek professional advice to ensure compliance and optimize tax liabilities.
Benefits of a Professional Tax Advisor
Managing Capital Gains Tax liabilities can be complex, especially for foreign investors or real estate owners in Turkey. Hiring a certified tax advisor can:
- Ensure that your property is properly indexed for inflation.
- Evaluate exemptions or bilateral tax treaties.
- Facilitate timely filing and payment processes.
- Handle objections or disputes with tax authorities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
