Tax Benefits in Real Estate Investment

Tuna TAS
Aug 11
2 min read

Real estate investment is not only about rental income and appreciation. With the right planning, tax benefits and exemptions can significantly boost your net returns. Here’s a 2025 updated guide to the main tax advantages in Turkey.

1. VAT Advantages in Housing

For first-time purchases, residential units up to 150 m² may benefit from a reduced VAT rate (1% or %10).
Certain urban transformation projects may also offer VAT exemptions.

2. Capital Gains Tax Exemption

If a property is sold after 5 years of ownership, capital gains are exempt from income tax.
Sales before 5 years are subject to income tax, above the exemption threshold.

3. Rental Income Benefits

Residential rental income is tax-free up to an annual exemption (approx. 47,000 TRY for 2025).
Investors can choose between lump-sum deduction (15%) or actual expense method when declaring expenses.

4. VAT Exemption for Foreign Investors, Tax Benefits

Foreigners who have not resided in Turkey for more than 6 months and pay in foreign currency can benefit from VAT exemption on their first property purchase.
This applies to both residential and commercial properties.

5. Incentives and Special Exemptions

Urban transformation projects: Additional tax advantages and government incentives.
Commercial real estate investments: Certain industrial zones and tourism areas may offer special tax benefits.
Double Taxation Agreements: Prevents foreign investors from paying tax twice on the same income.

Leveraging tax benefits and exemptions is one of the smartest ways to maximize returns in real estate. Successful investors always consider the tax dimension alongside property valuation and market trends.

Practical Guide: Tax Benefits

Topic	Benefit / Exemption
VAT Advantage	Reduced VAT (1-10-20%) for first homes, VAT exemption for foreigners
Capital Gains Exemption	No tax if sold after 5 years
Rental Income Exemption	Up to ~47,000 TRY tax-free in 2025
Expense Deduction Options	Lump-sum (15%) or actual expense
Incentive Zones	Urban transformation, industrial & tourism zones