PROPERTY DECLARATIONS AND PROPERTY TAX IN TÜRKİYE: A GENERAL GUIDE FOR FOREIGN PROPERTY OWNERS

PROPERTY DECLARATIONS AND PROPERTY TAX IN TÜRKİYE: A GENERAL GUIDE FOR FOREIGN PROPERTY OWNERS

One of the issues most frequently confused by foreigners who purchase an apartment, villa, office, shop, plot or land in Türkiye is the distinction between a property declaration and property tax. Although these two concepts are connected, they do not mean the same thing. In practice, many foreign owners assume that the process ends once the title deed transfer has been completed. However, after a property is acquired, the obligations to notify the municipality, establish the tax record and make regular payments are also important. In Türkiye, property tax is paid to the municipality in which the property is located, not to the central tax office.

The outcome in a specific case may be directly affected by such matters as the type of property, the municipality in which it is located, whether it is within metropolitan municipality boundaries, any exemption status and changes in ownership.

I. What Is a Property Declaration?

In practice, the term “property declaration” generally refers to notifying the municipality of information concerning a property. On the basis of this notification, the municipality creates or updates the property tax liability for the property. Türkiye does not have a conventional system requiring a new annual property tax return every year. Notification to the municipality is nevertheless required in circumstances affecting the tax value, such as a change of taxpayer, construction of a new building, subdivision or partition, or a change in use.

The Revenue Administration’s table of filing periods also expressly states that there is generally no obligation to file an annual property tax return, but that notification is mandatory where circumstances changing the tax value arise. The statutory notification period is the budget year in which the event occurs; where the event occurs during the final three months of that year, the period is three months.

In summary, a property declaration communicates to the municipality either “I am the owner of this property” or “A change affecting the tax status of this property has occurred.” In many municipalities, an accurate tax record will not be created, or may be created incompletely, unless this step is taken.

For example, a foreign person purchasing an apartment in Istanbul should verify after the title deed transfer that the relevant municipality has correctly opened the property record and, where necessary, that the notification procedures have been completed. Similarly, construction of a building on a plot, addition of an independent unit or a change in the classification of the property must be notified to the municipality.

II. What Is Property Tax?

Property tax is a local tax levied on buildings, plots and land situated within the borders of Türkiye. According to the Revenue Administration’s guide, the tax is paid to the municipality where the property is registered. A foreign person purchasing property in Türkiye may be liable for property tax to the municipality every year. The tax applies not only to Turkish citizens but also to foreign persons owning property in Türkiye.

An important point must be emphasized: property tax is entirely different from tax on rental income. Even if you do not rent out the property, property tax liability arises because you own it. In other words, property tax liability may continue even while the property is vacant.

III. Who Pays Property Tax?

As a rule, the owner of the property—that is, the person in whose name it is registered in the land registry—is the taxpayer. The law separately regulates certain special situations, including changes of ownership and usufruct rights, but the general principle is that the tax is paid by the person holding the right over the property. Where ownership changes, the tax liability is updated accordingly.

For example, if a foreign investor purchases a villa in Bodrum, that person will generally be the property tax taxpayer. If the same person allocates an office in Istanbul to their company, the property tax liability remains with that person so long as ownership does not change.

IV. When Does Property Tax Liability Begin?

In most cases, property tax liability begins from the calendar year following the year in which the property is acquired. The commencement date is subject to different technical rules depending on the specific circumstances, such as construction of a new building, erection of a structure on land or a change of ownership. The Revenue Administration’s property tax guide explains separately when liability begins and ends.

V. How Is Property Tax Calculated?

Property tax is calculated on the tax value of the property. This value is determined according to factors including the type and location of the property, the unit value per square metre of the land, standard building construction costs per square metre and other matters prescribed by legislation. Concepts commonly referred to by municipalities as the “market value” or “property tax value” play a decisive role in this calculation. For many municipalities, the Property Tax Declaration Copy (Market Value) Certificate or the unit land value per square metre can be obtained through e-Devlet.

Two apartments with similar features therefore need not be subject to the same property tax. Properties of the same size located in different districts or streets may have different tax values.

VI. Current Property Tax Rates

According to the property tax rates published by the Revenue Administration, the building tax rate is one per thousand for residences and two per thousand for other buildings. The rate for land is one per thousand and the rate for plots is three per thousand. Where a property is within metropolitan municipality boundaries and adjacent areas, however, these rates are applied at twice the normal amount. In other words, the effective rate in a metropolitan area is generally two per thousand for a residence and four per thousand for a workplace.

For example, the property tax rate for a residence in Ankara’s Çankaya district, within metropolitan municipality boundaries, may be higher than that for a comparable residence outside a metropolitan area. Likewise, the rate applicable to a shop in Istanbul may differ from the rate applicable to a shop in a district outside metropolitan municipality boundaries.

VII. When Is Property Tax Paid?

According to the Revenue Administration, property tax is paid in two instalments. The first instalment is payable during March, April and May, and the second in November. Municipalities generally provide online payment, cashier services or other agreed payment channels.

A foreign owner of an apartment in Türkiye is required to pay the first instalment each year during the spring period and the second instalment in November. If payment is forgotten, the debt may carry over to subsequent years and a late-payment surcharge will be added.

VIII. Importance of the Property Declaration and Municipal Record

Many foreign owners believe that completing the title deed transfer is sufficient. However, failure to keep municipal records current may lead to various problems. The property’s tax value may be determined incorrectly, liability may appear under the wrong person, the former owner’s record may remain open after a sale, or no record may be opened for the new owner. This may later result in accumulated debt, interest and correction procedures.

For example, if municipal records are not updated after a foreign person sells an apartment, that person may continue to appear as the owner in the system. Conversely, if the foreign purchaser does not have a record opened or checked, accumulated tax may emerge unexpectedly at a later date.

IX. What Happens If Property Tax Is Not Paid?

The most immediate consequence of failure to pay property tax on time is a late-payment surcharge. Under the legislation governing collection of public receivables, a late-payment surcharge applies to public debts not paid when due. The Revenue Administration’s digital tools also show that late-payment surcharges and interest may be calculated separately.

The problem is not limited to interest. Unpaid property tax may over time lead to the following consequences:

• Accumulation of debt in municipal records;

• Commencement of enforcement and collection proceedings;

• Delay or difficulty in obtaining certain documents from the municipality;

• Discovery of earlier-period debts during sale, inheritance, transfer or file-review procedures;

• Files that cannot be closed because of the debt and additional correction applications.

Although the extent of these consequences varies according to the specific case, it is incorrect to assume that a debt constituting a public receivable disappears automatically.

X. Importance of Property Tax During a Sale

Property tax debt is one of the items frequently checked during property transactions. Particularly in legal due diligence before a sale and purchase, existing property tax debts and the declaration status in municipal records are highly important. Even where transfer of the property is possible, debts from previous periods may cause disputes between the parties and complicate closing. In addition, the property tax value serves as a reference in the calculation of title deed fees in many transactions.

For example, while preparing to sell an apartment in Istanbul, a foreign owner may discover unpaid property tax from previous years at the municipality. The purchaser may then request that the debt be cleared before closing. A market value certificate is also among the documents frequently requested in preparation for a sale.

XI. Difference Between Property Tax and Rental Income Tax

These are entirely different taxes. Property tax is a local tax paid to the municipality because a person owns property. Rental income tax is income tax that may arise on income earned by letting the property. Property tax liability may continue even where the property is vacant; if no rental income is earned, however, no income tax may arise.

For example, a foreign person owning a house in Antalya may never have rented it out. In that case, rental income tax may not arise, but property tax liability continues. If the house is rented out, separate tax obligations concerning rental income may arise in addition to property tax.

XII. Market Value and Its Importance

The market value, or property tax value, is the value recorded by the municipality and used as a reference in many property-related transactions. It is fundamental to the calculation of property tax and also plays an indirect role in certain title deed and fee transactions. The fact that a Property Tax Declaration Copy (Market Value) Certificate can be obtained through e-Devlet for many municipalities demonstrates its practical importance.

For foreign investors in particular, the market value is also useful for checking whether the municipal record has been established correctly after purchase. A record that is too low, too high or otherwise incorrect may later cause various tax and procedural problems.

XIII. Practical Steps for Foreign Property Owners

In practice, a foreign person purchasing property in Türkiye is advised to perform the following checks:

• Verify that the record has been opened or updated at the municipality in which the property is located;

• Check whether the property tax assessment appears under the correct person’s name;

• Investigate access to the relevant municipality’s online payment system;

• Where necessary, verify the market value and unit land value through e-Devlet or the municipality;

• Separately consider the municipal aspect of changes such as sale, donation, inheritance, reconstruction, merger or subdivision.

XIV. Frequently Asked Questions

Do I still pay property tax if my home in Türkiye is vacant?

Yes. Property tax is connected to ownership; whether rental income is earned is not by itself decisive.

Do I pay property tax to the tax office or the municipality?

You pay it to the municipality in which the property is located.

Must I submit a new property declaration every year?

The general system is not based on an annual return. Notification is nevertheless required where changes affecting tax liability or the property’s tax value occur.

Is the property tax rate the same everywhere?

No. The rate varies according to the type of property, and rates are doubled within metropolitan municipalities.

If I do not pay, is interest the only consequence?

No. In addition to a late-payment surcharge, the debt may accumulate, collection proceedings may be commenced and administrative problems may arise during later transactions.

Conclusion

For foreigners owning property in Türkiye, the property declaration and property tax are a natural continuation of the purchase process. Completion of the title deed transfer alone is not sufficient. Municipal records must be established correctly, the tax must be paid on time and changes concerning the property must be notified where required. Property tax is a local tax arising from ownership and is entirely different from rental income tax. Failure to pay on time may lead to a late-payment surcharge, municipal record problems and collection difficulties.

Reviewing municipal records and the property tax position in advance provides a significant advantage, particularly for foreign investors, owners who do not reside in Türkiye, persons owning more than one property and those preparing to sell. A properly structured file substantially reduces both tax risk and administrative problems that may arise during transactions.