When taxes collected on real estate in question, the gains from real estate appreciation tax is one of the most curious subjects. In the taxation of gains from real estate appreciation, the gains obtained from the disposal of the said goods are called valuation gains. According to the content of Article 80 of the Revenue Law No. 193 valid in Turkey, the subject of value increase is realized by selling the purchased real estate within 5 years. However, there is not any obligation to pay taxes on all capital gains from the sale of real estate.
VAT is not payable on the sale of inherited or gratuitous property or when parents buy a house for their children. Another condition of taxation is that the earned income must be above the exemption limit. There are also some exceptions in the taxation of gains from real estate appreciation.
Exception in Unearned Increment
The tax liability that will arise regarding the taxation of gains from real estate appreciation is established according to the income amount between the time the real estate is purchased and sold. The tax authorities clarify the size of the difference between purchases and sales every year. The amount specified as this limit is called the exemption limit. The mentioned exemption limits are legally determined by the relevant tax offices every year. The exemption limits change each year and are published by the tax authorities as Waiver. The said exemption is announced after clarification within the scope of the studies carried out at the beginning of each budget year.
It is legally obligatory for those who have increased their value above the exemption limit to submit a declaration. The declaration of appreciation must be made by 25 March of the year following the year in which the property was sold. For example, a person who sold his property in September 2019 is required by law to file a declaration by March 25, 2020. The tax to be calculated on the basis of the declaration is paid in two different instalments, in March and July of the same year..
How is Real Estate Tax Calculated?
When calculating the real estate capital appreciation and accordingly the real estate capital tax, the price of the property on the day of purchase is translated according to the producer price index (PPI). The price calculated according to the PPI is deducted from the selling price of the property. Expenses such as taxes and fees are also deducted from the result. If the remaining amount is above the exemption limit, the tax to be paid is determined according to the tax class of the relevant year.