INCOME TAX ON INCOME FROM REAL ESTATE PURCHASE AND SALE

INCOME TAX ON INCOME FROM REAL ESTATE PURCHASE AND SALE

The difference in value between the purchase and sale of real estate is considered as an increase in income and is subject to income tax .

One of the exceptional cases in which this income is not subject to income tax is the purchase-sale period of more than 5 years , the change of title deed due to urban transformation and the fact that the real estate has not been paid for. (inheritance, real estate right acquired through donation)

The most common issue in this regard is the exemption of the income arising from the sale made after 5 years from the real estate purchase date from this income tax .

This calculation made between the trading dates is based on the date written on the title deed issued during the purchase of real estate. (If it is proven that the new owner is occupied in that property before, different calculations may be in question)

The income obtained from the sale of the real estate before 5 years is called "net value increase" . The positive price difference that occurs during trading is determined by increasing the increase rate of the domestic producer price index (YI-PPI) announced by TURKSTAT on a yearly basis. ( See , at www.tuik.gov.tr )

From this gain, the 18.000 TL exception amount announced for 2020, the taxes paid during the purchase are deducted and the amount to be subject to tax is calculated. (interest amount paid in loan usage is also included in this calculation)

For this reason, the sales phrases “suitable for credit up to 400,000 TL” in the descriptions of real estates with a value of 1.000.000 TL are written on real estate advertisement sites .

An example calculation; (no credit)

The income tax payment arising from the sale of the real estate that was purchased for 400,000 TL in 2016 for 1,000,000 TL in 2020 is approximately 50,000 TL .

• The purchase value of the house is 780,000 TL with 95% PPI index increase between 2016-2020
• Title deed fee 20.000 TL (2%)
• The tax exemption for 2020 is 18.000 TL.

• 1.000.000 TL sales price - 780.000 TL purchase value = 220.000 TL Net profit

• 220.000 TL - 18.000 TL exemption = 202.000 TL Income tax base

• 202.000 TL - 20.000 TL Title deed fee = 182.000 TL Net Income tax base

Income tax for the year 2020

15% up to 22,000 TL

Between 22.000 TL - 49.000 TL 20%

49.000 TL -120.000 TL 27%

Between 120.000 TL- 600.000 TL 35%

600.000 TL and above 40%

_{(Up to 22.000 TL between 15% / 22.000 TL-49.000 TL 20% / 49.000 TL-120.000 TL between 27% / 120.000 TL - 600.000 TL between 35% to be applied)}                                                       

3.300 TL up to 22.000 TL                           

22.000 TL - 49.000 TL between               5.400 TL

49.000 TL -120.000 TL between              19.170 TL

120.000 TL -182.000 TL between 21.700            TL       

More than one purchase and sale transactions made during the year are evaluated as a commercial activity and subjected to a separate calculation.

DONATIONS AND INHERITANCE TAX EXEMPTION AMOUNTS FOR REAL ESTATE INHERITANCE TAX FOR 2020

306.603 TL in separate inheritance shares for each spouse and children           

613.582 TL in the inheritance share of the childless spouse                                            

For donations,                                                                                  7.060 TL