The Valuable Residence Tax Deferred! A last-minute development has occurred regarding the Valuable Residence Tax. The tax has been postponed for one year and its rates have been adjusted. Residential properties valued up to 5 million TRY will not be subject to the Valuable Residence Tax. In addition, taxpayers with a single primary residence will be exempt from paying this tax. According to the announcement, the General Directorate of Land Registry and Cadastre will not perform new valuations for residences. Instead, the building’s tax value will be used as the basis. Accordingly, taxpayers subject to the Valuable Residence Tax will file declarations at the beginning of 2021.
During the General Assembly session of the Grand National Assembly of Turkey, five new articles were added to the bill proposing amendments to the Zoning Law, the Geographical Information Systems legislation, and certain other laws. The newly submitted and accepted provisions include the items summarized below.
Which Provisions Were Changed in the Valuable Residence Tax?
The following items outline the changes made to the Valuable Residence Tax rules.
- Residential properties with a value up to 5 million TRY will be exempt from the Valuable Residence Tax.
- The General Directorate of Land Registry and Cadastre will cease conducting separate valuation procedures for this purpose.
- The building tax value determined under the Property Tax Law will be taken as the reference value.
- In cases of co-ownership and joint ownership, the tax base calculation will be based on the total value of the residential property.
- For residences valued between 5 million TRY and 7.5 million TRY, the portion exceeding 5 million TRY will be taxed at a rate of 0.3% (binde 3).
- For residences valued between 7.5 million TRY and 10 million TRY, the portion exceeding 7.5 million TRY will be taxed at a rate of 0.6% (binde 6).
- For residences valued above 10 million TRY, a fixed amount of 22,500 TRY will apply to the first 10 million TRY, and any amount above that will be taxed at a rate of 1% (binde 10).
- Residential properties owned by the Housing Development Administration (TOKİ), as well as taxpayers who own a single residence or who possess multiple properties that would fall under the valuable residence classification, will have their lowest-valued residential property exempt from the Valuable Residence Tax.
The tax liability for valuable residences will be effective from January 2020. However, no tax returns are required to be filed for the year 2020, and no tax assessments will be issued for that year. The President is authorized to extend these timeframes by up to one year.
Accordingly, obligations related to the Valuable Residence Tax will begin in 2021. As part of these changes, Article 43 of the Property Tax Law, which previously contained provisions related to the Valuable Residence Tax, has been repealed.