The article explains that, under the communiqué published on January 15, 2021, residences whose building tax value exceeds 5,250,000 TL for 2021 are subject to the High-Value Housing Tax, while building plots, land and business premises fall outside its scope.
According to the article, for those who own only one residence, that residence is exempt, and for those who own more than one residence, the lowest-value residence falling within the scope of the tax is exempt; the exemption also applies to ownership in shares.
The tax rates are given as 3 per thousand, 6 per thousand and 10 per thousand on the basis of 2021 values, and the example in the communiqué is used to explain how the tax payable by a taxpayer who owns three residences is calculated.
The implementation of the High-Value Housing Tax was postponed by 1 year in 2020; its communiqué was published in the Official Gazette on January 15, 2021. The taxation system to be applied to homes whose value (for 2021) exceeds 5 million 250 thousand TL, the exemption status, the tax rates and the implementation framework have been summarized by Çebi Hukuk & Danışmanlık on the basis of the published communiqué.
- The real estate subject to taxation is set out in Article 2 of the General Implementation Communiqué on the High-Value Housing Tax. Under this provision, residential immovable properties constitute the subject of taxation, while building plots, land and business premises remain outside the scope of taxation.
Subject of the tax, tax value and the concept of residential immovable property
ARTICLE 2 – (1) Residential immovable properties located within the borders of Türkiye whose building tax value exceeds the amount set out in Article 42 of Law No. 1319 constitute the subject of the High-Value Housing Tax.
(2) In the application of the High-Value Housing Tax, the concept of "residential immovable property" refers to buildings having the character of a residence and, in buildings consisting of more than one independent unit, to each independent unit. Each independent unit is assessed separately for taxation purposes.
- The taxpayers of the High-Value Housing Tax are specified in Article 3 of the Communiqué. Accordingly, the owners of residential immovable property, the holders of a right of usufruct and, where these do not exist, persons who dispose of the property as if they were its owner are regarded as taxpayers. In addition, persons who own the property as co-owners (in shares) will be taxpayers in proportion to their shares, while joint owners will be held jointly and severally (together) liable for the entire tax.
- When will the tax obligation begin? The tax obligation (liability) will begin from the year following the date on which the building tax value of the residential immovable property exceeds the amount specified in Article 42 of Law No. 1319 (5,250,000 TL for 2021). If the building tax value remains below the specified amount, the taxpayer, by notifying the tax office of this matter, will be exempt from the obligation to file a tax return. If the building tax value remains below the monetary threshold on which taxation is based, the taxpayer will notify the relevant tax office of this situation together with supporting documents, and in that case no tax return will be filed for the relevant year.
Taxpayer, commencement and termination of tax liability
ARTICLE 3 – (1) The taxpayers of the High-Value Housing Tax are the owners of residential immovable properties, the holder of the right of usufruct, if any, and, if neither exists, those who dispose of the residential immovable property as if they were its owner. (…)
(4) Persons who own a residential immovable property in co-ownership are taxpayers in proportion to their shares. In joint ownership, the owners are jointly and severally liable for the tax.
(5) Liability for the High-Value Housing Tax;
a) Begins from the year following the date on which the building tax value of the residential immovable property exceeds the amount specified in Article 42 of Law No. 1319. (...)
(8) If, in subsequent years, the building tax value of residential immovable properties subject to the High-Value Housing Tax falls below the amount set out in Article 42 of Law No. 1319 applicable in the year in which the tax return is to be filed, the taxpayer notifies the relevant tax office of this situation together with supporting documents, and in that case no tax return is filed for the relevant year.
- The persons exempt from the High-Value Housing Tax are set out in Article 4 of the Communiqué. Accordingly, persons who have only one residential immovable property will be exempt from taxation even if its value is above the monetary threshold. Furthermore, persons who have more than one residential immovable property will still be exempt from taxation with respect to the lowest-value property, even if the value of all their properties is above the monetary threshold for taxation. In addition, even where persons own a single residence in shares, they will be able to benefit from the exemption provision for the portion corresponding to their shares.
- In addition, properties built under a construction-for-flats agreement will be able to benefit from the exemption provision as long as they have not been sold, transferred or assigned, leased or otherwise used.
Exemptions
ARTICLE 4- 2) The High-Value Housing Tax exemption applies to the property of persons who have only one residential immovable property within the borders of Türkiye and, for persons who have more than one residential immovable property, to their single lowest-value residential immovable property falling within the scope of the High-Value Housing Tax (including where a right of usufruct is held). Where these persons own a single residence in shares, the exemption also applies to the portion corresponding to their shares.
(2.1) Taxpayers who have more than one residential immovable property must notify the relevant tax office, within the period for filing the tax return, of their single lowest-value residential immovable property falling within the scope of the High-Value Housing Tax, using the “Notification by Persons with More than One Residence Concerning Their Single Lowest-Value Residence to Which the Exemption Will Apply (Including One Held under a Right of Usufruct)” (Annex 2A) annexed to this Communiqué.(...)
(4) Newly built residential immovable properties that are recorded as assets of the businesses of persons whose principal activity is building construction and that have not yet been the subject of a first sale, transfer or assignment are exempt from the tax as long as they are not the subject of a first sale, transfer or assignment. This exemption provision also applies to residential immovable properties that remain with the contractor who has undertaken the construction work under the contract in construction-for-flats projects. If these properties are leased or otherwise used, it is not possible to benefit from the exemption.
- Another matter regulated in Article 5 of the Communiqué is how much tax will be levied, in which value brackets, on residential immovable properties above the monetary threshold that may come within the scope of the High-Value Housing Tax. Accordingly, the amount/rate of tax payable according to the value of the residential immovable property (for 2021) is as follows:
Values between 5,250,000 TL and 7,875,000 TL (this amount included), for the portion exceeding 5,250,000 TL (3 per thousand)
Values up to 10,500,000 TL (this amount included), 7,875 TL for the first 7,875,000 TL, for the excess (6 per thousand)
Values above 10,500,000 TL, 23,625 TL for the first 10,500,000 TL, for the excess (10 per thousand)
- To understand the regulation better, in addition to what we have mentioned, it will be useful to look at the examples given in the published Communiqué:
Taxpayer (E) has 3 residential immovable properties. Of these, the 2020 building tax value of the first property is 4,900,000 TL, the 2020 building tax value of the second property is 6,000,000 TL, and the 2020 building tax value of the third property is 6,500,000 TL.
Since the 2020 building tax value of the first residential immovable property belonging to taxpayer (E) does not exceed the value specified in Article 42 of Law No. 1319, it does not fall within the scope of the tax; since the second and third properties of taxpayer (E) exceed that value, they fall within the scope of the tax. Therefore, the tax liability of taxpayer (E) will begin from the start of 2021, the following year. However, since the taxpayer has more than one residential immovable property falling within the scope of the High-Value Housing Tax, the property with the lowest building tax value among them is exempt from the tax pursuant to subparagraph (b) of the first paragraph of Article 46 of Law No. 1319, and the taxpayer will give notice of it using (Annex 2A).
Let us assume that the building tax values of these properties for 2021 are 5,145,000 TL, 6,300,000 TL and 6,825,000 TL, respectively;
(*It has been assumed that the values were updated at half the revaluation rate and that the revaluation rate for 2020 was set at 10%.)
Accordingly, the High-Value Housing Tax that taxpayer (E) will declare by the end of the 20th day of February 2021 and pay in two equal installments by the end of February and August will be calculated as set out below.
Building tax value of the first residence (2021 value) 5,145,000 TL
Tax amount payable for the first residence Not subject to tax or notification
Building tax value of the second residence (2021 value) 6,300,000 TL
Tax amount payable for the second residence Exempt and subject to notification (Annex 2A)
Building tax value of the third residence (2021 value) 6,825,000 TL
High-Value Housing Tax rate applicable to the third residence ‰3
Tax amount payable for the third residence [(6,825,000-5,250,000)*‰3]=4,725 TL
This article is a general assessment prepared in accordance with the legislation in force on its date of publication; it does not constitute a legal opinion. This English text is a translation of the Turkish original; in case of any discrepancy, the Turkish version prevails.