Capital Gains Tax on Selling Property in Turkey

When selling property in Turkey, it's crucial to distinguish between the 2.2% stamp duty shared by the buyer and seller and the Turkish Capital Gains Tax (CGT). Capital Gains Tax applies to the profit made from selling your property within five years of its purchase. Here’s an in-depth look at how it works and how it can impact your investment.

What is Turkish Capital Gains Tax?

Capital Gains Tax in Turkey is levied on the profit made from selling your property within five years of the original purchase date. The profit is calculated by subtracting the original purchase value from the sales value. This tax is mandatory for all sellers, regardless of nationality or residency status.

Capital Gains Tax Rates

The rates for Capital Gains Tax are structured similarly to income tax but with different thresholds. Here's a breakdown:

• Example Case Study:
• Original Purchase Price: 200,000 Lira
• Sales Price after 2 Years: 217,000 Lira
• Profit: 17,000 Lira
• Tax Rate: 25%

In this scenario, the seller must pay 25% of the 17,000 Lira profit as Capital Gains Tax.

Avoiding Double Taxation

One significant advantage of Turkey's tax system is its international tax agreements, which help avoid double taxation. This means if you pay Capital Gains Tax in Turkey, you typically won’t be taxed again on the same profit when you transfer the money to your home country.

Selling Through a Business

For investors, purchasing property through a business registered in Turkey can be advantageous. Profits from selling property through a business are treated as regular business income and taxed accordingly, thus exempting you from Capital Gains Tax.

Holding Property for Five Years

A key strategy to maximize your investment is to hold onto the property for more than five years. Properties sold after this period are exempt from Capital Gains Tax, allowing you to retain the full profit.

Key Takeaways

• Understand the Distinction: Capital Gains Tax is separate from the 2.2% stamp duty.
• Timing Matters: Selling within five years incurs Capital Gains Tax on the profit.
• Leverage Tax Treaties: Avoid double taxation through international agreements.
• Business Advantage: Consider buying through a business to bypass CGT.
• Long-Term Investment: Hold property for over five years to avoid CGT.

For personalized advice and detailed guidance on Turkish Capital Gains Tax or other property-related inquiries, feel free to contact our expert team. We're here to help you navigate the complexities of Turkish property laws and optimize your investment.