Capital Gains Tax

Tax exemption: Properties that have been owned for 5 or more years are free of capital gains tax when sold.

In all other cases capital gains tax is calculated in the following way:

Imagine a property is bought in 2003 for 100,000YTL.

Each year an allowance for inflation is added to the value of the property. The government decides what % rate this inflation is each year.

For the sake of this example we will assume that the rate is 10% every year.

2003 – land value – 100,000YTL

2004 – land value with 10% inflation – 110,000YTL

2005 – land value with 10% inflation – 121,000YTL

At the beginning of 2006 the land is sold for 150,000YTL. The difference between the original price and the sales price is 50,000YTL, however the difference between the inflation adjusted price and the original price is 29,000YTL.

29,000YTL is the amount of profit that the capital gains tax will be charged on.

The tax on 29,000YTL will be worked out in the following way.

The first 6400 YTL of profit is exempt from tax

The remainder of the profit (29,000YTL – 6000YTL) is 23,000YTL

This is taxed in the following way:

The first 0 – 7000YTL is taxed at 15%

The next 7000 – 18,000YTL is taxed at 20%

The next 18,000 – 40,000YTL is taxed at 27%

Any profit over and above 40,000YTL is taxed at 35%

Note: This information is correct as of 2007 and will be updated following any changes in taxation laws.