Certain legal arrangements are introduced by the General Communiqué on the Implementation of Valuable Housing Tax
(“Communiqué”) on tax liability, tax basis and tax rate, tax statement, time and place of payment regarding the Valuable
Housing Tax ("VHT") introduced by the Law on Digital Service Tax and Amending Certain Laws and Statutory Degree numbered
375, and the building tax value ("Threshold") as set out in Law on Immovable Property Tax numbered 1319.
Concept of Residential Property
VHT applies to residential properties (residential buildings and every independent section in buildings consisting of
more than one independent section) located within the borders of Turkey and whose building tax value, which will be
obtained from the municipality where the property is located, exceeds
5,227,000 TRY as of 2021.
It is stated that, for the evaluation of whether the property has a residential character or not, the actual use of the
property will be examined in addition to the class of the property as registered in the records.
Tax Liability
In accordance with the Communiqué, VHT taxpayers are specified as (i) owners of residential properties, (ii) owners of
usufruct rights, if any, and (iii) any person who dispose of the property as if they are its owners, if neither of the
above apply.
In the case of co-ownership, the owners will be liable for tax at the rate of their shares; in the case of joint
ownership, the owners will be jointly and severally liable for the tax.
Beginning of Tax Liability
The liability for VHT begins as of the year following the date on which; (i) the building tax value of the property
exceeds the Threshold, (ii) the building tax value of the property exceeds the Threshold as a result of the construction
of a new building that would modify the tax value (including additions to existing buildings) or the combination of
different plots of land or of shares into a single plot of land and (iii) the exemption period for the VHT
expires.
End of Tax Liability
In accordance with the Communiqué; tax liabilities regarding (i) properties that are burnt, destroyed or that became
unusable completely and (ii) properties which were subject to VHT but then fulfilled the conditions for exemptions, will
end as of the date of incidence of these and (iii) regarding properties which were subject to VHT and whose building tax
value then fell below the Threshold on the year in which tax statement was to be made, the tax office shall be notified
of this with evidencing documents and no tax statement would be made for the relevant year.
Exemptions
In accordance with the Communiqué, residential properties listed below are exempt from the VHT:
-
Properties of administrative institutions, municipalties and universities falling under the general budget or special
budgets,
-
For those who own only one residential property within the borders of Turkey, that property, for those who own more than
one residential property, the residential property with the lowest value that is subject to VHT,
-
Immovable properties belonging to foreign states and used as embassies and consulates, as well as immovable properties
allocated for the residence of ambassadors and their appurtenances (provided that these exemptions are mutual) and
immovable properties belonging to international organizations headquartered in Turkey and to representative offices of
international organizations in Turkey,
-
Newly built immovable property that is registered with the enterprises whose main activity is construction, that has not
been rented or otherwise used and has not yet been sold under an initial sale, transferred or assigned
Taxpayers who have more than one residential properties must notify the relevant tax office within the period for filing
a tax statement, of the lowest-value residential property among the residential properties they own that are subject to
VHT.
However, it is provided in the law that the tax to be collected from taxpayers who benefit from the exemption, despite
not fulfilling the conditions to benefit from the exemption, and taxpayers who do not report the change in their
situation, despite having lost the right to benefit from the exemption, will be collected along with a penalty and
interest for late payment.
Tax Basis and Tax Rate
The portion of the building tax value exceeding the Threshold applied for the relevant year will constitute the tax
basis for VHT, and the lower and upper limits on the specified rates will be
increased each year by half of the
revaluation rate determined in accordance with the provisions of the Tax Procedure Code numbered 213 for the previous
year.
Accordingly, the tax basis and rates for 2021, calculated with an increase of 4,555%, which is half of the revaluation
rate set for 2020 (9,11%/2=4,555%), are as follows:
| VHT Basis |
VHT Rate |
| For those between 5,227,000 and 7,841,000 |
For the portion exceeding 5,227,000 TRY (3 per thousand) |
| TRY (including this amount) |
|
| For those up to 10,455,000 TRY (including this amount) |
For 7,841,000 TRY of that amount, 7,842 TRY, for the remainder (6 per thousand) |
| For those over 10,455,000 TRY |
For 10,000,000 TRY of that amount, 23,526 TRY, for the remainder (10 per thousand) |
In addition, in the case of co-ownership or joint ownership, whether VHT will be applied or not shall be determined and
the calculation of the tax basis shall be made based on the
total value of the immovable property.
Tax Statement
It is provided that the tax statements are to be submitted to the tax office where the immovable property is located,
until the end of the
20th day of February of the relevant year,
together with a document showing the building tax value
-for the year on which the tax statement is filed and the previous year-, obtained from the municipality where the
immovable property is located.
Tax statements can be submitted electronically, and in this case the document showing the building tax value to be
submitted along with the tax statement must be delivered to the relevant tax office by hand or by mail within 15 days
after the date of the submission of the tax statement.
If the immovable properties declared in the same tax assessment are under the jurisdiction of different tax offices, the
statement may be submitted to any of the competent tax offices.
If a situation arises that will require the beginning of the tax liability during the year, the tax statement will be
submitted until the end of the 20th day of February of the following year. Accordingly, the tax liability of the person
who purchased the residential property subject to VHT in 2020 will begin as of the following year and the tax statement
will be submitted until the end of the 20th day of February of 2021.
Payment of Tax
It is provided that VHT to be assessed and accrued annually by the competent tax office to which the tax statement is
submitted,
shall be paid in two installments until the end of February and August in the relevant year.
Please click
here to access the full text of the Communiqué. Since there are many examples provided in the Communiqué,
it would be useful to examine them in case of tax liability.
Nur Duygu Bozkurt Kadirhan, Senior Associate
Burak Batı, Associate
Doruk Köklü, Legal Intern