Pursuant to the Amendment Law on Digital Service Tax, Some Laws and Statutory Decree Numbered 375 with the number 7194 published in the Official Gazette dated 7 December 2019 and numbered 30971, new provisions under the title of “Valuable Residence Tax” have been added to the Real Estate Tax Law numbered 1319 (“Law”). In accordance with these provisions, properties having 5.000.000 Turkish Liras and more building tax value or with 5.000.000 Turkish Liras and more value as determined by the General Directorate of Land Registry and Cadastre (“Directorate”), qualified as residences, which are located within the borders of Turkey, will be subject to the valuable residence tax (“VRT”).
The properties qualified as residences whose value is determined as 5.000.000 TL or more by the General Directorate of Land Registry and Cadastre within the scope of this legislation, are published on the website of the Directorate in a way that can be reached by the relevant persons and are also notified to such persons. The value of the properties qualified as residence will be final if there is no objection to the Directorate within 15 days following the notification of the same persons. Objections made within due time will be evaluated and become definite within 15 days and the final value will be published and notified to the relevant persons in the same manner. This value will be accepted as the value determined by the Directorate within the scope of VRT application. In this tax application, if there is no value determined by the Directorate, the taxation will be made based on the building tax value. Building tax value is the tax value determined in line with article 29 of the Law.
The tax base is the highest of the building tax value and the value determined by the Directorate. The taxation ratio of the properties qualified as residence is as following:
- Residences with a value between 5.000.000 and 7.500.000 Turkish Liras (3 per thousand)
- Residences with a value between 7.500.001 and 10.000.000 Turkish Liras (6 per thousand)
- Residences with a value more than 10.000.001 Turkish Liras (10 per thousand)
In shared and joint ownerships, the calculation of the tax is based on the total value of the property qualified as residence. The value of these properties is increased every year in line with the re-determined value in accordance with the provisions of Tax Procedural Law numbered 213. The fractions up to 10.000 Turkish Liras of the values calculated accordingly are not taken into consideration. The property value determined by the Directorate is not increased in the re-determination ratio for the year, whichthe value determination was made.
Liability and Commencement
The VRT is paid by the owner, by the usufruct right owner, if any, or by the persons who use the property as the owner if the first two do not exist. The persons who own a property qualified as residence with shares are liable pro rata their shares for the tax payment. In joint ownerships, the owners are jointly and severally liable for the tax payment. The liability for the valuable residence tax commence the year following;
- the date that the value of the property qualified as residence is determined as 5.000.000 Turkish Liras or more by the Directorate,
- the date on which the reasons that amend the tax value stated in articles 33(1) and 33(7) of the Law occur,
- the date on which the exemption is terminated.
The liability for the properties qualified as residence which are burnt down, demolished, become unusable or exempt from the VRT, terminates as of the instalment following these incidents.
The below stated properties qualified as residence are exempt from the VRT:
- The properties qualified as residence ownerships or usufruct rights of which belong to general and private budgeted administrations, municipalities and universities.
- The properties qualified as residence ownerships or usufruct rights of which belong topersons who own only one property within the borders of Turkey; except for the ones who are dependant and are not over 18 years old, among those who documents that they do not have any income, the ones whose income is only provided by the social security institutions which are incorporated by the law, (This provision is applicable to the shares of those who own one property with shares).
- The properties qualified as residence that are owned by foreign countries and used as embassy or consulate and used for the residence of ambassadors and its appurtenances (subject to reciprocity) and those owned by international institutions whose registered address is in Turkey or the Turkish agencies of such international institutions.
- The newly constructed properties qualified as residence which have not been subject to a first sale, transfer or assignment which are registered under the establishments whose main area of activity is building construction ( including the properties qualified as residence which will be owned by the contractor under the inventory sharing agreement, excluding the leasing or similar usage of these properties).
Tax Statement and Payment Dates
The taxpayer will make the statement to the authorized tax office under Revenue Administration along with the building tax value and the value determined by the Directorate for the property qualified as residence and the relevant certificates, until the end of the 20th of February of the year following the determination of the value of such property as 5.000.000 Turkish Liras or more. Afterwards the tax will be yearly levied and accrued by the authorized tax office. The taxpayer should submitthe statement in the same manner for the following years and the tax will be yearly levied and accrued by the authorized tax office. The taxpayers with joint ownership can provide statement either jointly or solely. In cases with shared ownership, the statement is given solely.
The tax levied and accrued by the tax office is paid in two equal instalment until the end of February and August of the relevant year. In case the taxpayer becomes liable to pay VRT during the year, the taxpayer will provide the statement within the period to provide a statement for the following year. The articles 37 (2) and 37(3) of the Law is not applicable within the scope of the VRT. Finally, with this new legislation Ministry of Treasury and Finance has been authorized to determine the procedures and principles for the application of this tax, to determine the documents required for the application of exemptions, to extend the periods for providing statements and payments up to three months, to determine the authorized tax office where the statement will be submitted, to determine the form, the content and annexes of the statement and to accrue the tax without requiring a statement.