The title deed (ownership document) is a document that is issued for a specific property and proves the ownership of the property by the individual listed in the document.
The title deed includes the owner’s name and photograph, information about the property, cadastral survey numbers, and it specifies the location of the property. The title deed is regulated by the Directorate of Land Registry under the Ministry of Environment and Urbanization of Turkey.
What are the taxes and fees for the Tapu in Turkey? And what are the available types of title deeds in Turkey? We will learn about that in the following article.
What is the tapu in Turkey?
The title deed, also known as the Tapu in Turkey is the legal certificate that proves the ownership of the property.
This document includes accurate information about the owner, the property itself, its location, as well as the total area and other specific details that are carefully preserved.
The title deed grants its holder the right to deal with the property, whether through renting, selling, or investing. Obtaining this document is essential to prove a person’s ownership of the property and it is issued by the Directorate of Land Registry, which is under the Ministry of Environment and Urbanization of Turkey.
In 1942, the title deed tax began to be implemented in real estate transactions and became an integral part of them. This government tax is one of the most important factors to consider during real estate buying and selling processes.
Legally, these fees must be imposed on both parties in a commercial transaction and must be paid within a year from the transaction date, or else a financial penalty will be imposed.
The Tapu in Turkey “title deed” tax rate is 4%, but the government reduced this rate to 3%. This reduction had a positive impact on sales rates, but it was later reverted to the previous level in 2019.
Tapu types in Turkey
When you’re considering purchasing real estate in Turkey, you should be aware of important and fundamental points regarding Tapu in Turkey and their various categories in the country, along with unique details for each type and its characteristics.
Red Title Deeds
Real estate certificates with a red color are referred to as Red title deed, and they are designated for residential properties, whether apartments, villas, buildings, or commercial premises. This type of deed includes three different forms of ownership patterns, as follows:
1. Shared Ownership Deed
This type of deed is based on a joint ownership system among a group of owners for a single property. This pattern is also known as “transitional ownership,” where each owner obtains specific ownership rights for a certain period of the year. During this period, each of these owners has a defined period (usually at least seven days) in which they own the property. This type of deed is prevalent in properties intended for vacation, leisure, and similar investment purposes, allowing the owner comprehensive actions such as selling, renting, and transferring to others.
2. Attached Ownership Deed
This type represents a category of title deeds in which each part of the property is registered separately. This is done by planning a suitable construction project on a designated piece of land, obtaining approval to start construction, and then dividing the project into independent sections, such as apartment units within a residential building. Each part of the property is issued a separate deed that outlines its independent location and specific information, whether construction has begun or not. The property type is specified in these deeds as either construction land or agricultural land due to incomplete construction. When construction is completed and residence approval is issued, ownership deeds are allocated for the property. These documents prove complete ownership of the property to their holder, and each owner in this property is granted an attached ownership deed, which includes details about the location, area, and specifications of the building. Subsequently, the owner is granted a separate ownership deed.
3. Complete Ownership Deed (Kat Mülkiyeti)
Also known as “Kat Mülkiyeti” in Turkish, these documents register property ownership after the completion of the building and define the independent units within it. Separate approvals are obtained for each unit before registration, and a unique ownership deed is organized for each unit, proving the document holder’s ownership of the independent unit within the building. Complete ownership deeds and attached ownership deeds differ from agricultural land deeds and land suitable for construction in content. These documents include specific information such as apartment or unit numbers and their location within the building, and the share of land owned on which the building stands.
Blue Deed or Agricultural Title Deed
Also known as the “blue deed,” it plays a prominent role in defining Turkey’s moderate geographical climate and its stunning natural beauty. These characteristics give its lands rich soil, making them suitable for cultivation and opening broad horizons for investment in the agricultural sector to achieve profitable returns. Therefore, if you’re considering entering the agricultural investment field in Turkey, it’s necessary to be familiar with the types of documents and certificates for agricultural lands, which are as follows:
1. Reconstructible Lands Deed:
A type of deed, known as a “Land Deed for Reconstruction,” is allocated for agricultural areas that hold the potential for both construction and agricultural utilization simultaneously.
This type of deed is granted to lands with a building classification and falls within the urban development plans of the city. In the Turkish language, these deeds are referred to as “Arsa,” where landowners have the right to construct buildings upon them by obtaining a special permit from the relevant local authorities.
2.Land Deed for Agricultural Land
also known as rural land typically encompasses vast expanses and is referred to as “Tarla” in the Turkish language.
Infrastructure development is permitted on these lands, ranging from 5% to 20% of the total land area. Landowners can utilize and benefit from these lands through activities such as livestock farming, establishing farms, poultry farming, and more. When the land is classified as rural land, a variety of agricultural projects are allowed in Turkey, ranging from cultivation and plowing to livestock and poultry farming, among other agricultural activities.
When considering investing in agricultural land, investors must verify the land classification with the municipality to ensure whether it is indeed agricultural or not. The land may appear as agricultural land in records or documents; however, it may be part of real estate development plans in the area. Therefore, investors should proceed with caution and confirm this point with the local municipality governing the land they intend to invest in.
Who must pay the Tapu fees in Turkey?
Fess of the Tapu in Turkey is Among all the property-related taxes in Turkey, the title deed tax, also known as “Tapu” in Turkey, stands out as one of the key points to consider before purchasing any property, given its significance and the substantial amounts associated with it. Its rate is 4% of the property’s value and is payable by both the seller and the buyer to the state. Although there is no explicit regulation governing these duties, custom generally indicates that the fees are often borne by the purchasing party, meaning the buyer shoulders 4% of the total property value as a real estate registration fee.
Therefore, it is important for negotiation to take place in advance and clearly between the seller and the buyer in the sales contract regarding how the tapu in Turkey fee, or “title deed fee,” will be paid. The percentage of commission that the intermediary will receive, if present, should also be specified, in addition to clarifying other costs arising from the execution of the property sale transaction.
How to calculate the title deed in Turkey?
When it comes to calculating the Tapu in turkey tax, a simple method is used for the calculation. This involves multiplying the registered value of the property, let’s assume it’s $150,000, by the title deed tax rate. For instance, if we multiply $100,000 by 4% (or 0.04), the result would be $4,000. Thus, we obtain the value of the title deed tax payable when transferring property ownership in Turkey.
How to pay the title deed tax in Turkey
Tapu in Turkey,This tax is collected during the registration of the title deed at the Land Registry Office in Turkey, where it equals 4% of the property value stated in the sales contract. This tax is equally divided between the seller and the buyer, meaning that in the case of purchasing a property for sale in Turkey, the seller pays 2% of the property value, and the buyer pays the same percentage unless otherwise agreed upon. It’s worth noting that many construction companies for new projects include this tax within the selling price and take care of its payment.
Taxes in Turkey and their types
Taxes in Turkey can be categorized into three main types, each of which further branches into several subcategories. In the following paragraphs, we will briefly delve into these subcategories Taxes in Turkey.
The types of taxes in Turkey include the following:
1. Income Taxes
This type of taxes pertains to levies imposed on personal income and joint income for couples. These taxes are calculated based on individuals’ annual income levels. Subcategories of income taxes include classifications such as personal income tax and family income tax.
2. Expenditure Taxes
This category encompasses fees and taxes imposed on purchases and various expenditures. Some examples include Value Added Tax (VAT), import taxes, and local fees on goods and services.
3. Wealth and Ownership Taxes
This category includes taxes imposed on assets, wealth, and properties. Examples of these taxes include property tax, land taxes, and property ownership taxes.
These tax types are an integral part of the tax system in Turkey. Understanding the various types of taxes is crucial for proper tax compliance and effective financial planning for individuals and businesses in Turkey.
How to inquire about real estate taxes in Turkey
Property taxes are divided into 3 categories:
Here is your organized and reformulated information:
1. Purchase Tax (First Tax)
This tax is one of the taxes paid once when purchasing a property. It is paid when acquiring Tapu in Turkey i.e registering particular property in the name of the buyer.
2. Municipality Tax (Second Tax)
This tax is paid twice a year and goes to the municipality where the property is located. Information about this tax can be obtained from the municipality building, its website, or through the electronic government portal (e-devlet).
3. Earthquake Tax (Third Tax – DASK or Earthquake Insurance)
This tax, sometimes known as “DASK” or “Earthquake Insurance,” is paid annually. Information or inquiries about this tax can be obtained from insurance companies, their agents, or their websites. Most banks also provide this service to their customers.
By arranging and presenting this information in an organized and clear manner, it will be easier for readers to understand and remember important details about the different property-related taxes.
What is the real estate tax law in Turkey?
The Capital Gains Tax is a type of property tax imposed on properties sold within five years from the date of purchase. This type of tax assumes that the purpose behind selling properties within a period of less than five years is investment-oriented, and therefore, a tax called the Capital Gains Tax is levied on them.
This tax is regulated by Article 80 of the Income Tax Law in Turkey and is determined based on the profit difference between the property’s purchase price and its selling price.
Questions about the tapu in Turkey
1. What is the Property Tax in Turkey?
Property taxes in Turkey remain relatively low when compared to other European countries and even the United States. The property tax rate in Turkey is influenced by various factors, including the city and property type, whether it is commercial, residential, or otherwise. The tax percentage is directly tied to the property’s size, typically falling within the range of 5% to 18%. This distribution clearly highlights Turkey’s advantageous position with lower tax rates compared to many other countries.
2. How to Pay Property Tax in Turkey?
Property taxes in Turkey can be settled by either visiting the relevant municipality office for the property or by conducting an online bank transfer to the official municipality account.
3. What is the Residential Property Tax?
The annual tax assessment for properties in Turkey is determined based on the declared value during the purchase process. This declared value is established through the property ownership document, commonly referred to as Tapu in Turkey Consequently, the tax rate applied to residential properties in Turkey is 0.1% of the declared value.
4. Property Tax Percentage in Turkey: What You Should Know
Property tax rates in Turkey are subject to variation depending on factors such as property type, size, condition, and location within the city. The specific type and rate of tax are determined based on these variable factors. Typically, these rates fall within the range of 5% to 18%.
5. What is the Value of Property Tax?
Property tax in Turkey applies to properties sold within a timeframe not exceeding five years from the purchase date. This tax is levied under the assumption that properties sold within this short duration—less than five years—are primarily acquired for investment purposes. Consequently, a tax known as Capital Gains Tax is imposed within the framework of property taxation.
6. Who Bears the Property Sale Tax?
In real estate transactions, it is the seller’s responsibility to cover the associated tax costs. This is attributed to the financial gains accrued by the seller, whether the transaction involves the sale or rental of residential or commercial properties. These regulations are outlined by the law. Nevertheless, the law does not preclude negotiations between the buyer and seller regarding a different arrangement for sharing the tax burden, distinct from the standard rule.
7. What is the Ownership Tax?
When owning property in Turkey, ownership tax is a one-time payment. The tax rate varies according to the city and property type, ranging between 1% and 18%. The specific tax value is linked to the property’s type and size. For example, apartments with a net area of less than 150 square meters incur a 1% tax.
ِEdited by : VAAL Real Estate