Turkey’s Ministry of Treasury starts working to improve system for taxing over real value of property
The Ministry of Treasury and Finance has initiated a study and is working on a new system where taxes on real estate will be based on actual values. The ministry has accelerated its efforts to ensure that transactions at the Land Registry reflect real market values, and taxation will be implemented accordingly. This move aims to tackle the issue of undeclared income in real estate transactions and rental income.
The Ministry’s comprehensive plan, which is expected to be introduced in Parliament when it reconvenes, includes measures to tax real estate transactions based on actual values. Currently, both buyers and sellers are required to declare the sale price of the property, ensuring that it is no less than the property tax value. A stamp duty of 0.2% is applied separately to both buyers and sellers based on the declared price.
If it is determined that the declared transaction value does not reflect the real value, or that a lower tax was paid than required based on the property’s tax value, the Ministry imposes fines and demands the missing taxes from both parties.
Additionally, the Income Tax Law stipulates that if a property is sold within five years of acquisition, the profit made is subject to capital gains tax. The taxable profit is calculated by deducting the indexed acquisition cost, stamp duty, and other expenses from the sale price, with an exemption of up to 87,000 Turkish Lira for the 2024 tax year.
The Ministry is also focusing on educating the public about declaring the actual transaction prices and has been conducting analyses and field audits to prevent undeclared property income. They are emphasizing the importance of filing capital gains tax returns, reminding property owners of their legal obligations before tax deadlines. Furthermore, the Ministry is studying international examples to develop new regulations for property taxation, and they are introducing measures to ensure accurate reporting of rental income, such as requiring rent payments to be made through banks.
