The Valuable House Tax came into effect in Turkey on 15 January 2021, after being incorporated into the Turkish tax system in 2019 as part of the "Law on Digital Services Tax and Amendments to Several Laws and Legislative Decree No. 375" No. 7194.
Although this law was enacted on 7 December 2019, the Valuable House Tax, part of the real estate portion of the legislation (i.e. Real Estate Tax Law No. 1319), was supposed to be introduced in 2020 but was postponed to 2021 due to objections and great debate.
The Valuable House Tax officially came into force with the publication of the General Communiqué on the Application of the Valuable House Tax (“Communique”) in the Official Gazette on 15 January 2021.
According to the related provisions of the Real Estate Tax Law, the Tax will apply to houses worth at least TRY 5,227,000. Houses worth less will not be taxed.
The Tax is based on the taxable value of a house, which is determined according to the Real Estate Tax Law. Overall, the Tax rate is 3‰ (three per mille) for houses with a value between TRY 5,227,000 and TRY 7,841,000, 6‰ (six per mille) for houses with a value between TRY 7,841,001 and TRY 10,455,000 and 1% for houses with a value of more than TRY 10,455,001.
Taxpayers who own only one residential property within the borders of Turkey do not have to pay any Tax, no matter how high the value of this property is.
Those who have more than one house within the scope of the Tax do not have to pay Tax on the house with the lowest value. Taxpayers who have more than one house must notify the competent tax office of their least valuable property by means of the "Notice of exempt least valuable property of persons having more than one residential property (including those with usufructuary rights)" before the end of the 20th day of February each year for the houses they own which meet the threshold for the previous year.
Since the liability of this Tax starts in the year following the year in which the established thresholds are reached, houses that reach the above thresholds will be subject to the Tax in 2022. The threshold for the year 2020, which determined the houses subject to the Tax, was TRY 5 million.
According to the Communiqué, related taxpayers (i.e. owners), beneficial owners or persons who use the house as if they were owners and who meet the 2020 threshold must submit an application to the tax administration near the house in question by 20 February 2021. The Tax can be paid in two (2) instalments during the year: in February and in August.
In short, houses worth more than TRY 5 million in 2020 will be subject to the Valuable House Tax in 2021, and owners of such houses must apply to the tax administration by 20 February.
For more information on the Valuable House Tax, please contact your regular CMS source or our local CMS expert Dr Döne Yalçın.