Geoff Brighton

We have a property in Turkey which we had built over the winter of 2003/04. We didnt actually get our tapu however until 2006. We are now considering selling but are confused about the Turkish capital gains tax position. we understand there is a 4 year ownership ruling to avoid tax. Does anyone know if this is 4 years on receipt of the tapu or 4 years from when the money was transferred into Turkey? thanks Geoff

Martyn

Receipt of the Tapu.

KayaKoyuOldBoy

Yep, unfortunately the clock doesn't start ticking until the TAPU is issued in your name. So you're liable until 2010 at 25% tax on the profit.

Lillylilly

Thought it was 20% with built in discount of several thousand lira on the amount of CG.

Martyn

This was posted by Ceemac October 2007. I post all of the post because there is some very useful information.

Some (hopefully useful) information on taxation in Turkey.

Even if you do not work in Turkey, the state finds a way to get a decent amount of tax money from you.

First of all, there’s the VAT (18% except for some foods at 8%), that has to be paid for any goods or service one obtains. While prices in shops and supermarkets usually include VAT, one can still find some traders who will offer to reduce the price if you don’t ask for the invoice (fatura), or sales slip (fis).

If you own an immovable property, you have to pay Real Estate Tax (emlak vergisi). Emlak Vergisi is paid in two instalments, end of May and end of November, at the municipal property office (belediye emlak servisi). The tax is calculated according to the value that the municipality fixes for that particular property. The percentage is 1% for private houses, 2% for commercial properties, and 3% for non-developed land.

In case you have invested in property and want to re-sell it before 5 years has passed (until 2006 the period was 4 years, from 2007, 5 years), you will have to pay Capital Gains Tax (kiymet artisi vergisi), of between 10-20% depending on whether the seller is a person or a company. This tax does not apply to inherited property.

Turkish lira bank accounts pay good interest but bear in mind that 10% of the benefit will have to be paid as Witholding Tax (stopaj vergisi).

If you rent your home out, there’s an Income Tax to be paid once a year. If your rental income exceeds 2200 ytl per year, the exceeding amount (minus a flat rate of 25% for maintenance expenses), is liable to a tax of 20%. This tax can be paid in two instalments (end of March, end of July).

Cars or motorcycle owners know that Vehicle Tax (MTV), is no longer an insignificant sum. The amount is calculated according to the vehicle’s age and engine size. Vehicle tax is paid to the tax office in two instalments at the end of January and the end of July. Of course this tax holds for owners of boats/yachts, light planes and helicopters as well.

Quite a few foreigners have founded companies to buy properties they fell in love with. Even though inactive, there are fees to be paid to the state such as monthly VAT declarations (KDV beyani), quarterly income declarations (Gelir vergisi beyani), and yearly book stamping fee (defter tasdik parasi). Once the company has started to work actively, there is Corporation Tax (kurumlar vergisi), to be paid on the benefit. The company tax rate was reduced in 2006 from 40% to 20%, payable in quarterly instalments of temporary or provisional tax (gecici vergi). The temporary tax is calculated according to the expected income, and a final payment according to the exact balance of the previous year has to be made in April.

If the company has employees, there’s the Employment Tax (muhtasar), to be paid for them (in addition to social security, pension scheme etc). You even pay muhtasar for the company’s accountant.

The maximum allowance for non-taxable income (house cleaning, private lessons etc), is 2600 YTL per year.
The income tax rate for self-employed persons is 15% as long as the yearly income does not exceed 7500 YTL, 20% if the yearly income is below 19000 YTL, and 27% for income up to 43000 YTL per year.

Please be aware that not paying due tax can cause serious difficulties. You may be stopped leaving the country until your tax debts are paid.

Tax obligations and rate may change. Please check all information before you proceed.

Source : Issue 43 Bodrum Observer

biggles

yes we bought ours oct 2004 so we can sell without gains tax.

Martyn

Providing that is when you got the Tapu

saoirse

does anyone know what your tax allowance is which can be ofset against your CGT?

C & J

I understand the time ruling for Capital Gains Tax in Turkey, but please keep this in mind.
If you are a UK resident (for tax purposes), my understanding is that you are still governed by the laws in the UK and so would therefore still have to pay Capital Gains if any were due.
In other words, the Turkish tax system will allow you not to pay Capital Gains Tax in Turkey after a certain time period, but the UK system is that you pay Capital Gains Tax on a gain. If a profit has been made on a property that you own, whereever it might be, as a UK tax payer you still have to pay Capital Gains tax on it. You are taxed on your "gains" regardless of which country they have come from.
I feel quite sure that this is correct, as I attended a talk once about this very topic, but if in doubt, the Tax Office in the UK would be able to answer the question.
Sorry if this has put a damper on the situation, it wish it was different myself, but fore warned is fore armed, as they say.