What is the luxury real estate tax in Turkey?

Turkish Law No. 7194 and the amendments to Real Estate Tax Law No. 1314 provide for the imposition of a luxury real estate tax on every property whose value exceeds 5 million Turkish liras and is used for residential purposes. The amendments applied to Law No. 7194 require that this tax be collected from real estate that fulfills these conditions starting from 2020. Still, in 2021 an amendment was made under provisional Article No. 24 of the Real Estate Tax Law. In 2021, this amendment was published in the Official Gazette on 15. January 2021.

What is residential real estate in Turkey? 

The concept of “real estate as a residence” refers to every residential building that constitutes an independent real estate part. It also refers to each separate real estate part of the buildings that contain one or more independent parts, meaning that the independent residential real estate parts are calculated separately. In addition, reference is made to the title deeds of the real estate parts to determine whether it bears the dwelling status.

Bracket and Ratio

The tax bracket for the valued housing tax is defined as the “construction tax value” and is calculated based on the costs per square meter of construction. The Ministry of Finance and Treasury and Environment and Urbanization determine this value. The value of the land share of the specified property is taken into account according to legal principles. To be taxed by the assessment committees by Article 29 of the Real Estate Tax Law.

Tax assignment – place and time of payment:

The luxury or value housing tax is paid by the owner of the valuable residential property or the owner of the right to use the property. Still, in the absence of either of them, the property owner must pay it, and for a property with more than one owner, each owner pays a portion corresponding to the proportion of his share in the property.

As for the taxation, it begins one year after:

  • The date on which the real estate tax value mentioned in Article 42 of the Real Estate Tax Law exceeded the value or luxury housing tax limit, which is 5,000,000 Turkish liras in the year 2020 and 5,227,000 Turkish liras in the year 2021.
  •  The date of a change in the tax value of the real estate is due to one of the requirements for changing the tax value of the real estate that was mentioned in paragraphs 1 to 7 of Article 33 of the Real Estate Tax Law, the most important of which is concerning housing.
  •  The date of adding an annex to the building, including adding an elevator to the building, or adding central heating installations, completely changed the form of building use legally.