This is the English version of a Turkish article. The original, with further detail and linked petition templates, is at Emlak Vergisi, Tapu Harcı ve Değer Artışı Kazancı.
Four separate fiscal obligations attach to buying and selling property: property tax, title deed duty, capital gains and the declaration of rental income. Title deed duty is charged on the real sale price and, as a rule, separately on buyer and seller. Understating the price leads to an assessment with penalties and creates a further legal risk for the buyer.
Some of these obligations are easy to miss, and they come back as penalised assessments. Below: the property tax declaration, the title deed duty, and the item overlooked most often — capital gains.
Property Tax
The Property Tax Act No. 1319 governs the tax on buildings and land. It is paid to the municipality where the property is situated.
The declaration. On acquiring a property, a property tax declaration must be filed with the municipality. Failure to file leads to a penalised assessment.
The mistake made most often is not filing after the transfer. The land registry does not notify the municipality; the obligation is the owner's.
Payment. As a rule in two instalments a year: the first in March–May, the second in November.
Exemption and zero rate. The Act lists those entitled to a reduced (zero) rate on defined conditions: people who can document that they have no income, people whose income consists only of a pension from a statutory social security institution, disabled people, veterans, and the widows and orphans of those killed in service.
The relief applies to a single dwelling of not more than 200 m² gross in Turkey. Application is made to the municipality, and retrospective correction can be requested.
Who Pays the Title Deed Duty
Under the Fees Act No. 492, duty is charged on transfers of immovable property.
It is collected separately from the buyer and the seller and calculated on the transfer price.
A critical rule: the value on which duty is charged cannot be less than the property tax value held by the municipality.
Understating the price is common in practice, and the exposure is heavy:
- Penalised assessment. If the real price is established, the underpaid duty is demanded with a tax loss penalty and default interest.
- Evidential risk. If the sale is held void, or the price has to be refunded, the amount stated in the deed governs.
- Capital gains. An understated acquisition price increases the taxable gain on a later sale.
Declaring the real price and paying through a bank is safer over any horizon.
When Capital Gains Arise
This is the item overlooked most often.
Under repeated art. 80 of the Income Tax Act, gains from disposing of immovable property within five years of acquisition are capital gains and subject to income tax — whatever the manner of acquisition, except acquisitions without consideration.
- A sale made after five years falls outside capital gains altogether.
- Property acquired by inheritance or gift (without consideration) is outside it.
Calculating the gain: the acquisition cost and the expenses of the disposal are deducted from the sale price.
Repeated art. 81 adds an important relief: the acquisition cost is increased by the domestic producer price index, excluding the month of disposal. In inflationary periods this indexation reduces the taxable base substantially.
Indexation requires the increase to be ten per cent or more.
There is also a statutory exempt amount, updated annually; gains not exceeding it are not taxed.
The declaration is made in the annual income tax return in March of the following year.
| Obligation | Who pays | When |
|---|---|---|
| Property tax | Owner | Two instalments, May and November |
| Property tax declaration | New owner | By the end of the year following acquisition |
| Title deed duty | Buyer and seller separately | At the transfer |
| Capital gains | Seller | On a sale within 5 years of acquisition |
| Rental income declaration | Landlord | March of the following year |
| Inheritance and transfer tax | Heir or donee | Within the statutory period |
No capital gain arises on the sale of inherited property; the five-year rule does not apply to acquisitions without consideration.
Declaring Rental Income
Rental income from property is also subject to income tax, as income from immovable property.
The residential exemption: under art. 21 of the Income Tax Act, a statutory portion of the annual receipts from letting buildings as dwellings — updated each year — is exempt.
Those who cannot use the exemption are listed: people obliged to declare commercial, agricultural or professional income by annual return, and those with receipts above the exemption threshold whose gross salary, investment income, property income and other earnings together exceed a defined limit.
Expense method: taxpayers may choose the lump-sum or the actual expense method. Those choosing the lump-sum method cannot switch back for two years.
For commercial lettings, withholding generally applies; the tenant deducts the tax.
Failing to declare rental income leads to a penalised assessment, and it can be detected from bank records.
What to Watch
- File the declaration with the municipality when you buy. This is the obligation missed most often.
- Declare the real price and pay through a bank.
- Keep the purchase documents. They prove the acquisition cost when capital gains are calculated later.
- Track the five-year rule. The timing of a sale makes a substantial tax difference.
- Use the indexation. Updating the acquisition cost by the producer price index lowers the base.
- Check the reduced-rate conditions. A zero rate may apply to pensioners and disabled people with a single dwelling.
- Declare rental income and choose the expense method deliberately.
If you face an assessment, you must choose within thirty days of notification between settlement, reduction of the penalty, correction or litigation.
Selling within five years of acquisition creates a capital gain; property acquired by inheritance or gift is outside it. When the gain is calculated, the acquisition cost can be updated by the producer price index — which lowers the base substantially.
Frequently Asked Questions
I bought a house — must I file with the municipality?
Yes. The property tax declaration is the owner's obligation, and failing to file leads to a penalised assessment.
Is understating the price in the deed risky?
Yes. The underpaid duty is demanded with penalties, only the stated amount is recoverable if the sale fails, and future capital gains tax increases.
When can I sell without paying tax on the gain?
Sales made more than five years after acquisition fall outside capital gains.
Do I pay tax on selling inherited property?
No. Disposal of property acquired without consideration — by inheritance or gift — is outside capital gains.
Can I be exempt from property tax?
People with no income, those whose income is only a social security pension, disabled people, veterans and the widows and orphans of those killed in service may claim the reduced (zero) rate for a single dwelling of not more than 200 m² gross.