Yes. Individuals are subject to income tax on gains from selling Turkish real estate if the disposal occurs within five years of acquisition; after five years, the gain is not taxable for individuals under the “value increase gains” rules. Corporate sellers are taxed under corporate tax rules, with a separate immovable property sale exemption if statutory conditions are met. This framework is defined by the Income Tax Law No. 193 and Corporate Tax Law No. 5520.
Legal basis and scope for individuals
Turkish Income Tax Law No. 193 classifies profits from the disposal of immovable property (gayrimenkul) as “value increase gains” (değer artış kazançları) when the sale occurs within five years from the acquisition date for properties acquired on or after 1 January 2007. If the disposal takes place after five full years, the gain is outside the taxable scope for individuals. The legal basis is Article 80, which sets the five-year holding period and the conditions under which such gains are taxable as personal income. Gains from the disposal of immovable property acquired gratuitously, such as by inheritance or donation, are not considered value increase gains and are therefore not taxed under Article 80. [1]
How the five-year rule works and key exemptions
For individuals, the five-year period begins on the legal acquisition date recorded on the title deed (tapu). If the property is sold before five full years elapse, the net gain is taxed as part of the individual’s annual income, subject to the progressive income tax tariff. Article 80 also provides an annual inflation-updated exemption amount specifically for value increase gains; the exempt threshold is revalued each year by the Ministry of Treasury and Finance and announced through tax administration guidance. There is no separate “principal residence” exclusion in Turkish law. Disposals of immovable property acquired without consideration, including by inheritance, are expressly excluded from value increase gains under Article 80 and are not taxed as capital gains when sold. [1][2]
Calculating the taxable gain and indexation
When a sale within five years is taxable, the net taxable gain equals the sale price minus the acquisition cost and allowable expenses. Article 81 details the determination of the net value increase and permits indexation of the acquisition cost by the domestic producer price index if the cumulative increase between the acquisition month and the sale month exceeds 10 percent, which helps neutralize inflation effects in the calculation. Allowable deductions include documented expenses directly related to the acquisition and disposal, such as certain taxes, fees, and improvement costs that add to the property’s value. The resulting net amount, after applying the annual exemption defined under Article 80, is declared in the annual income tax return and taxed at the applicable progressive rates in force for the relevant year. [1][2]
Non-residents and double tax treaties
Individuals who are not resident in Turkey are subject to limited tax liability on Turkish-source income. Income from the disposal of immovable property situated in Turkey is treated as Turkish-source under the Income Tax Law. Accordingly, a non-resident individual who sells Turkish real estate within the five-year period must assess, declare, and pay Turkish income tax on the value increase gain, unless the gain is excluded under Article 80 (for example, due to the five-year exemption or gratuitous acquisition). Double taxation agreements may modify the taxing rights, but Turkey’s treaties generally allocate primary taxing rights over immovable property gains to the state where the property is located, consistent with OECD principles. Taxpayers should check the applicable treaty and follow the Turkish filing requirements. [1][3][4]
Corporate sellers and the two-year immovable property exemption
Companies are not subject to the individual five-year rule. Gains from the sale of immovable property by corporate taxpayers are part of corporate income and generally subject to corporate tax. However, Article 5/1-e of the Corporate Tax Law No. 5520 allows a 50 percent corporate tax exemption on gains from the sale of immovable property held for at least two full years, provided statutory conditions are met, including the retention of the sale proceeds in a special fund in the balance sheet for a minimum period. The exemption rate is 50 percent following the amendment introduced in 2021, and it applies only to qualifying immovable property, not to inventory held for trading or development. Companies must consider VAT, land registry fees, and any special sector rules separately; these are outside the personal capital gains regime. [5][6]
Filing, deadlines, and payment mechanics
Tax on value increase gains for individuals operates on self-assessment. Taxable gains realized in a calendar year are reported on the annual income tax return. According to the Turkish Revenue Administration’s guidance for taxpayers, the annual return filing period for individuals is in March following the end of the calendar year, and the assessed tax is paid in two equal installments, typically in March and July, via the tax office or authorized channels. Non-resident individuals follow the same declaration approach for Turkish-source gains, subject to any relief granted by an applicable double tax treaty and administrative procedures for representation. Official guidance of the Turkish Revenue Administration provides procedural details in both Turkish and English. Readers should seek advice from a licensed tax professional to confirm obligations for their specific case. [2][4]
Practical considerations and documentation
Accurate records are critical to support the acquisition date, acquisition cost, and any improvement expenditures. The title deed, purchase contract, official valuations if any, and invoices for capital improvements are among documents typically relevant to the calculation. Sale and purchase prices must be recorded in Turkish lira for tax purposes, and any foreign currency amounts are converted under applicable rules. There is no withholding tax collected at the time of sale on individual capital gains from real estate; the liability arises through the annual return. If the sale occurs after the five-year holding period or the property was acquired without consideration, the individual would not declare a value increase gain under Article 80, but other taxes, such as land registry fees at transfer, may still apply. [1][2]
Summary
Individuals who sell Turkish real estate within five years of acquisition are taxed on value increase gains under Article 80, with an annual exemption and possible inflation indexation of cost under Article 81. Sales after five years fall outside this tax for individuals, and disposals of property acquired by inheritance or donation are excluded from value increase gains. Non-residents are taxable in Turkey on Turkish-source immovable property gains, generally unaffected by treaties that allocate taxing rights to the source state. Corporate sellers apply corporate tax rules, with a 50 percent exemption available for immovable property held at least two years when statutory conditions are satisfied. For personalized planning, a licensed tax adviser should review your specific facts and any applicable treaty.
Related Questions:
Q2 How are property purchase and sale taxes calculated in Turkey?
Q3 Do double tax treaties affect property sale taxes for foreigners in Turkey?
Q4 What costs and fees apply when transferring title (tapu) in Turkey?
Q5 How are rental income and capital gains from Turkish property reported?
References:
[1] Official Gazette (Resmi Gazete). “Income Tax Law No. 193 (Gelir Vergisi Kanunu), Articles 80–81.” https://www.mevzuat.gov.tr/MevzuatMetin/1.4.193.pdf
[2] Turkish Revenue Administration (Gelir İdaresi Başkanlığı). “Income Tax – Guides and Declarations (Individual Annual Return and Capital Gains Guidance).” https://www.gib.gov.tr
[3] Official Gazette (Resmi Gazete). “Income Tax Law No. 193 (Gelir Vergisi Kanunu), Articles 3 and 7 (full and limited tax liability; source rules).” https://www.mevzuat.gov.tr/MevzuatMetin/1.4.193.pdf
[4] Turkish Revenue Administration (Gelir İdaresi Başkanlığı). “Tax Guide for Foreigners.” https://www.gib.gov.tr/sites/default/files/fileadmin/user_upload/VI/rehberler/TaxGuideforForeigners.pdf
[5] Official Gazette (Resmi Gazete). “Corporate Tax Law No. 5520 (Kurumlar Vergisi Kanunu), Article 5/1-e (exemption for sale of immovable property).” https://www.mevzuat.gov.tr/mevzuat?MevzuatNo=5520&MevzuatTur=1&MevzuatTertip=5
[6] Official Gazette (Resmi Gazete). “Law No. 7316 (Amending Corporate Tax Law article 5/1-e to 50% exemption).” https://www.resmigazete.gov.tr
Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or investment advice. Property law and tax rules in Turkey change frequently. Consult a licensed Turkish lawyer, accountant, or real estate professional before making any purchasing decision.