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KPMG VERGİ / Blog / Blog Detay
6
Mayıs
2019
Taxes on Real Estates in Turkish Tax Legislation

General Information

Building tax and land tax are two different taxes imposed by the municipalities under the Real Estate Tax Law No. 1319 (Emlak Vergisi Kanunu, EVK). The taxpayer is the same for both taxes: a legal person or individual who owns the property or the usufruct or enjoys the benefits as an owner. The tax base is the fair market value. Several exemptions apply to land and buildings used for agricultural, industrial and fishing activities.

The rate of building tax is 0.2% (0.1% on residences). The rate of land tax is 0.1% (0.3% on building sites). Both taxes may be levied on the same property. These rates are increased by 100% for buildings and land within the boundaries of bigger cities.

The real estate tax paid is deductible for income tax purposes.

Taxable Property

  • Pursuant to Real Estate Tax Law (No. 1319), paying real estate tax on land and buildings (real property) located within the boundaries of Turkey is obligatory. 

  • The definition of the building in the law covers all of the fixed construction on land and on water, whatever the substance is made.

Who is the Tax Payer?

The real estate tax is paid by the owner of the building/land, the owner of the usufruct over the building/land right or if neither of these exists any person that uses the building/land is considered as its owner.

In the case of shared ownership, the owners are obliged to pay their shares.

How to determine the tax base?

The real estate tax is calculated on the tax value to be bound by the current council once every four years.

The value of tax cost is calculated by the Ministry of Finance and Ministry of Environment and Urban Planning jointly. When the calculation is made, the normal construction costs of the building square and the share of the unit plot to be determined by the appraisal commissions are taken as basis.

Tax value is calculated by increasing the tax value of the previous year from the year of the appraisal of the unit appraisal values to half of the revaluation rate to be determined and announced by the Tax Procedural Law.

What are the rates?

Real estate tax is calculated based on the (tax) value of the property and is subject to the following tax rates:

Classification of the 
real property
For real property located outside a metropolitan municipal areaFor real property located inside a metropolitan municipal area*
Residences0,1%0,2%
Other Buildings0,2%0,4%
Land0,1%0,2%
Vacant land for construction purposes0,3%0,6%

 
*The rates are increased by %100 for buildings and land located within a metropolitan municipal area.

Renovation of buildings and land

  • Construction of new buildings, additions to existing buildings or installation of elevators or heating systems,

  • Afforestation of the land,

  • Making land more than one by dividing the land,

  • Consolidation of all shares of a building divided into shares,

In case of the above reasons, it is obligatory to notify the relevant municipality within 3 months of the year in which the change occurred.

Exemptions

  • In the relevant law, buildings and lands located outside the boundaries of municipal and contiguous areas are exempt from the real estate tax.

However, buildings and lands used in commercial, agricultural and touristic activities will not benefit from this exemption.

  • The lands allocated for the investments within the scope of the "Investment Incentive Certificate" are exempt from the Real Estate Tax during the validity period of the "Investment Incentive Certificate".

The buildings constructed within the scope of the "Investment Incentive Certificate" benefit from temporary exemption for a period of five years.

  • The total tax value of the land of the taxpayers within the boundaries of a municipality or municipality is exempt from the Real Estate Tax of TRY 10.000.
     
  • According to the provisions of the "Act of Promotion of Tourism Industry", companies which are granted tourism company certificate will be temporarily exempt from real estate tax for five years for the buildings dedicated for tourism purposes

  • For the determination of the tax value, up to TRY 1,000 fractions are not taken into account.

Time of payment

The real estate tax is paid annually to local municipalities in two equal installments. The first installment term starts on March 1 and ends on May 31. The second installment term starts on November 1 and ends on November 30. Taxpayers could pay the full annual tax amount in the first installment term if they wish. Payment could be made at banks, online and in cash.

Example

Assume that the value of a real estate tax for a hotel in the municipality is 140,000.00 TRY.

Real Estate tax value of the hotel in 2018140.000,00 TRY
Half of the valuation rate for 2018 (%23,73/2)11,865%
Real Estate tax value of the hotel in 2019 (1+[1x2])156.611,00 TRY
Non-consideration of fractions up to 1.000 TL156.000,00 TRY
Real Estate tax rate for hotels (other buildings)0,2%
Calculated real estate tax312,00 TRY

 
In Summary

In Turkish Real Estate Tax Legislation; There is no special condition in terms of real estate tax application for hotels. Once the hotel's tax value has been determined, the real estate tax must be subject to the tax rate applied to other buildings, as the hotel is considered a workplace allocated to the execution of commercial activity.

The revaluation rate was determined as 23.73% in 2018 with the General Communiqué No. 503 of Tax Procedure Law.  In 2019, when calculating the real estate tax of the hotel, 50% of the valuation rate will be taken into consideration.

As outlined in the "Exceptions" section, having an "Investment Incentive Certificate" and a "Tourism Operating Certificate" could support the hotel's property tax exemption (five years).​