Capital Gains Tax

The background

Traditionally, it has been common practice in the Fethiye area, as well as many other parts of Turkey, for the sales value recorded on the title deed to be lower than the actual purchase price paid for the property. This is largely because developers and builders sought to minimise the amount of tax payable on the sale of new-build properties.

As a result, many property owners now have a title deed showing a significantly lower purchase value than the amount they originally paid. As Capital Gains Tax is calculated using the value recorded on the title deed, this can lead to a higher amount of tax being payable when the property is sold.

What is Capital Gains Tax?

Capital Gains Tax is a tax levied on the profit made from the sale of a property. In Turkey, it only applies when a property is sold within five years of its purchase date.

How to calculate Capital Gains Tax

When calculating Capital Gains Tax, allowances are made for inflation. The tax is then applied on a sliding scale, with the rate depending on the size of the gain made. In simple terms, the greater the profit, the higher the amount of tax payable.

Property Wizard Turkey recommends using an online calculator to obtain a more accurate estimate of any tax liability. Please click here to use the online calculator we recommend.

What do sellers need to know?

Sellers should be aware that some foreign buyers may be purchasing a property in order to apply for residency through property ownership. In such cases, the minimum sales value recorded on the title deed must be the Turkish lira equivalent of USD 200,000.

If a seller has owned the property for less than five years, they should consider any Capital Gains Tax liability when negotiating the final sale price. It is important to factor this cost into the overall transaction.

Property Wizard Turkey will be on hand throughout the sales process to provide guidance during negotiations and offer up-to-date advice on the best way to proceed.

Need More Information?

Please feel free to contact us  at Property Wizard Turkey if you have any questions or would like further information about Capital Gains Tax.