18.01.2021
Legal Basis
The Valuable House Tax was regulated between the 30th and 37th articles of the Law No. 7194 “Digital Service Tax and Amending Some Laws and the Legislative Decree Law No. 375” published in the Official Gazette No. 30971 on December 7, 2019.
The application of the tax was postponed to 2021 upon objections made at the beginning of 2020.
With the Valuable House Tax Application General Communiqué published in the Official Gazette dated January 15, 2021 and numbered 31365, the first declaration will be submitted until February 22, 2021. (Although the declaration date is February 20, 2021, since this date coincides with the end of the week, declarations must be submitted until February 22, 2021, which is the first working day.)
What are the payment dates for Valuable House Tax (VHT)?
The tax to be accrued will be paid in two equal installments by the end of February and August of the relevant year.
The first installment of the tax to be paid in 2021 must be paid by March 1, 2021, and the second by August 31, 2021.
The subject of the tax includes residences located in Turkey.
Among the residential real estates within the borders of Turkey, those with a building tax value of 5,000,000 Turkish Liras and above in 2020 will be taken into account in the calculation of the valuable house tax.
In the implementation of the tax, the concept of “residential real estate” refers to buildings that are residential buildings and each independent section in buildings consisting of more than one independent section.
Each independent section is evaluated separately in terms of taxation.
Whether the real estate is a residence or not, the actual usage status will be checked as well as the quality in the records!
How is the value of the Valuable House Tax base determined?
Building tax value refers to the price calculated for buildings according to Article 29 titled tax value of the Real Estate Tax Law No. 1319. Information and documents regarding the said value will be obtained from the municipality where the real estate is located.
The landlord or the beneficial owner – if any – will pay the Valuable House Tax.
The taxpayer of the valuable house tax is the landlord of the residential real estate, the owner of the beneficial owner if any, and the savers such as the landlord of the residential real estate, if not both.
Accordingly, the landlord, if any, beneficial owner of the residential real estate pays the valuable house tax for the residential property. If neither of them exist, those who actually use them like landlords of residential real estate pay it.
Everyone will pay Valuable House Tax in proportion to their share
Owners of residential real estate in the form of shared ownership are liable in proportion to their shares. The landlords are jointly responsible for the tax in the co-ownership.
Those who will be included will start paying taxes the following year
If the building tax value exceeds the amount specified in the Real Estate Tax Law and applied in the relevant year, the valuable house tax liability starts from the beginning of the year following the date of this situation.
Valuable House Tax will not be paid for houses that are burnt, demolished and become unusable!
Liability for residential real estates that are burnt, demolished, completely unusable or gain the exemption conditions while subject to tax will expire as of the tax installment following the date of such events.
Valuable House Tax will not be paid if the tax value decreases in the following years
In the following years, if the building tax value of the residence, which is subject to valuable house tax, remains below the amount applied for that year, this situation will be notified by the taxpayer with proving documents (letter from the municipality showing the tax value) to the tax office where the VHT obligation was opened and the VHT declaration for this year will not be submitted.
Examples of Calculation of Valuable House Tax;
Example-1
Taxpayer (E) has 3 residential real estates.
Of these immovables;
– The building tax value of the first real estate for 2020 is 4.900.000 TL,
– The building tax value of the second real estate for 2020 is 6,000,000 TL,
– The building tax value of the third real estate for 2020 is 6.500.000 TL.
-Since the 2020 building tax value of the first residential real estate belonging to the taxpayer (E) does not exceed the value specified in Article 42 of Real Estate Tax Law No. 1319, titled Valuable House Tax, it is not included in the tax.
-The second and third residential real estates belonging to the taxpayer (E) are subject to the tax in order that they exceed the said value.
Accordingly, the liability of the taxpayer (E) will start from the beginning of 2021, which is the following year.
However, since the taxpayer has more than one residential real estate that is the subject of the valuable house tax, the real estate with the lowest building tax value is exempt from tax pursuant to subparagraph 46/first paragraph (b) of the Real Estate Tax Law No. 1319 and will be notified (Annex 2A) by the taxpayer.
The building tax values of the aforementioned real estates for 2021, respectively,
1- First residence 5.123.195 TL,
2- Second residence 6,273,300 TL,
3- Third residence 6.796.075 TL;
Among the tax tariff from residential real estates subject to valuable house tax, it will be implemented as follows;
Those with a value between 5.227.000 TL and 7.841.000 TL (including this amount)
For the part exceeding 5.227.000 TL (3 per thousand)
Those with a value up to 10,455,000 TL (including this amount); 7,842 TL for 7,841,000 TL,
for more (6 per thousand)
Those whose value is more than 10,455,000 TL; 23,526 TL for 10,455,000 TL,
for more (10 per thousand)
Accordingly, the taxpayer (E) will declare until the end of the 20th day of February 2021 (22.2.2021) and the valuable house tax to be paid in two equal installments until the end of 2021-February and August will be calculated as follows.
| 1 |
Building tax value of the first residence (2021 value) |
5.123.195 TL |
| 2 |
Tax amount to be paid for the first residence |
Not subject to tax and notification |
| 3 |
Building tax value of the second residence (2021 value) |
6.273.300 TL |
| 4 |
Tax amount to be paid for second residence |
Exempted and subject to notification (Annex 2A) |
| 5 |
Building tax value of the third dwelling (2021 value) |
6.796.075 TL |
| 6 |
Valuable house tax rate for the third residence |
3‰ |
| 7 |
Tax amount to be paid for the third residence [(6.796.075-5.227.000) * 3‰] |
4.707,23 TL |
Example-2
The taxpayer (F) has 4 residential real estates.
Since the 2020 building tax values of the residential real estates belonging to the taxpayer (F) exceed the specified value, the said real estates are included in the valuable house tax. Therefore, the liability of taxpayer (F) will start from the beginning of 2021, which is the following year.
However, since the taxpayer has more than one residential real estate that is the subject of the valuable house tax, one of the real estates with the lowest building tax value is exempted from the tax and an exemption petition will be submitted by the taxpayer (Annex 2A).
Building tax values of the said real estates,
For 2021, respectively
– The building tax value of the first real estate for 2021 is 5.750.525 TL,
– The building tax value of the second real estate for 2021 is 5.750.525 TL,
– The building tax value of the third real estate for 2021 is 7.946.180 TL,
– The building tax value of the fourth real estate for 2021 is 10.978.275 TL;
For residential real estates subject to valuable house tax of the tax tariff, the followings will be implemented;
Those with a value between TL 5.227.000 and TL 7.841.000 (including this amount)
For the part exceeding 5.227.000 TL (3 per thousand)
Those with a value up to 10,455,000 TL (including this amount); 7,842 TL for 7,841,000 TL,
for more (6 per thousand)
Those whose value is more than 10,455,000 TL; 23,526 TL for 10,455,000 TL,
for more (10 per thousand)
Accordingly, the taxpayer (F) will declare until the end of the 20th day of February 2021 and the valuable house tax to be paid in two equal installments until the end of February and August will be calculated as follows.
| 1 |
Building tax value of the first residence (2021 value) |
5.750.525 TL |
| 2 |
Tax amount to be paid for the first residence |
Exempted and subject to notification (Annex 2A) |
| 3 |
Building tax value of the second residence (2021 value) |
5.750.525 TL |
| 4 |
Valuable house tax rate for the second residence |
3‰ |
| 5 |
Tax amount payable for second residence
[(5.750.525-5.227.000) * 3‰] |
1.570,58 TL |
| 6 |
Building tax value of the third dwelling (2021 value) |
7.946.180 TL |
| 7 |
Valuable house tax rate for the third residence |
‰ 6 for 7.841.000 TL of the building tax value and 7.842 excess |
| 8 |
Tax amount payable for the third residence
[7.842+ (7.946.180-7.841.000) * 6‰] |
8.473,08 TL |
| 9 |
Building tax value of the fourth residence (2021 value) |
10.978.275 TL |
| 10 |
Valuable house tax rate for the fourth residence |
23,526 TL for 10,455,000 TL of the building tax value, ‰ 10 for excess |
| 11 |
Tax amount to be paid for the fourth residence
[23.526+ (10.978.275-10.455.000) * 10‰] |
28.758,75 TL |
| 12 |
Total tax amount to be paid
(1.570.58 + 8.473.08 + 28.758.75) |
38.802,41 TL |
A document showing the value of the residence will be obtained from the municipality.
The taxpayers shall submit the document showing the building tax value (pertaining to the year for which the declaration was submitted and the previous year) obtained from the municipality of the residential real estate by adding to their declaration, to the tax office where the real estate is located, until the end of the 20th day of February of the relevant year.
VHT Declaration can be sent by the taxpayer in person or via Public Accountants, Certified Public Accountants and Sworn-in Certified Public Accountants.
Taxpayers will be able to submit their declarations themselves electronically or by signing contracts with Independent Accountants, Certified Public Accountants and Sworn-in Certified Public Accountants in the form of e-Declarations.
If the VHT is sent electronically, the letters showing the tax value will be submitted to the tax office separately.
If the declaration is submitted electronically, the document showing the building tax value to be added to the declaration is submitted to the relevant tax office by hand or by mail within 15 days following the filing date of the declaration.
Those who have more than one residential property subject to valuable house tax will submit a single declaration.
The taxpayers who have more than one residential property subject to valuable house tax that needs to be declared will submit a single declaration for all these real estates using Annex 1A Coded/Valuable House Tax Declaration No. 1.
Single residential real estate with the lowest value for those who have more than one residential real estate will not be included in the declaration, and the information regarding this residential real estate will be notified to the tax office with Annex 2A petition.
If the real estates subject to declaration are located in different locations, all notifications can be given to one of the tax offices.
If the real estates declared in the same declaration are under the jurisdiction of different tax offices, the declaration may be submitted by the taxpayer to any of the authorized tax offices where these real estates are located.
Those who are already taxpayers will make a notification to their Tax Office.
Taxpayers, who are liable in terms of income or corporate tax, will submit their valuable house tax declarations to the tax offices to which they are subject.
Declaration will be given every year
For the following years, the taxpayer continues to issue annual declarations in the same way. It is obligatory to add a document showing the building tax value for the year in which the declaration is submitted and the previous year to the declaration submitted for each year.
Liability of the persons included during the year will begin in the following year.
If a situation which is requiring to start the liability within the year, it starts from the following year, and the valuable house tax declaration is submitted until the end of the 20th day of February of the following year.
For example, the liability of the person who purchased the residential real estate subject to valuable house tax in 2020 will start from the year following the liability and the declaration will be submitted until the end of the 20th day of February 2021 (February 22, 2021, since it coincides with the end of the week).
Owning the residential real estate by share
EXAMPLE 5:
Taxpayers (G), (H) and (I) are the landlords of a residential real estate in equal ratio (1/3) shares.
The building tax value of the real estate in 2020 is 9.000.000 TL.
Since the building tax value exceeds 5.000000 TL, which is the value included in the Real Estate Tax Law for 2020, the valuable house tax liability will start from the beginning of 2021, which is the following year.
– The taxpayer (G) does not have any other real estate registered on it subject to this tax, other than his/her share in the said residential real estate.
– The taxpayer (H) has a second real estate with a building tax value of 5.500.000 TL in 2020.
– The taxpayer (I) has a second real estate with a building tax value of 6.500.000 TL in 2020.
– The taxpayer (G) will be exempted from the tax corresponding to his/her share in the real estate with a building tax value of 9.000.000 TL, as it is the only residential real estate subject to the valuable house tax, in accordance with subparagraph (b) of the first paragraph of Article 46 of Law No. 1319.
– Taxpayer (H)’s real estate with a building tax value of 5.500.000 TL and
– Taxpayer (I)’s real estate with a building tax value of 6.500.000 TL
The aforementioned taxpayers are exempt from tax in accordance with the subparagraph (b) of the first paragraph of Article 46 of the Law No. 1319 and they will make a notification with (Annex 2A), since real estates with the lowest building tax value out of more than one residential property they own.
The building tax value of the mentioned real estate subject to shared ownership is 9.409.950 TL by the relevant municipality for 2021;
Among residential real estates subject to valuable house tax of the tax tariff, it is implemented as follows;
Those with a value between 5.227.000 TL and 7.841.000 TL (including this amount)
For the part of which value exceeds 5.227.000 TL (3 per thousand)
Those with a value up to 10,455,000 TL (including this amount); 7,842 TL for 7,841,000 TL,
for more (6 per thousand)
Those whose value is more than 10,455,000 TL; 23,526 TL for 10,455,000 TL
for more (10 per thousand)
Accordingly, the said real estate will be declared until the end of the 20th day of February 2021 (22 February 2021, since it coincides with the weekend), and valuable house tax to be paid in two equal installments until the end of March 1, 2021 and the end of 31 August 2021, will be calculated as follows.
| 1 |
Building tax value (2021 value) |
9.409.950 TL |
| 2 |
Valuable house tax rate |
7.842 for 7.841.000 TL of the building tax value, 6‰ for the excess |
| 3 |
Calculated tax amount
[7.842 + (9.409.950-7.841.000) * 6‰] |
17.255,70 TL |
| 4 |
Tax amount payable by taxpayer (G) |
Exempted |
| 5 |
Tax amount payable by taxpayer (H) (17.255,70/3) |
5.751,90 TL |
| 6 |
Tax amount payable by taxpayer (I) (17.255,70/3) |
5.751,90 TL |
Those who are Exempt from Valuable House Tax
Exemptions:
The following residential real estates are exempt from valuable house tax:
a) Residential real estates that general and special budget administrations, municipalities, universities and the Housing Development Administration of Turkey have the right to own or usufruct.
b) Those who have one residential real estate with the lowest value within the borders of Turkey and those who have more than one residential real estate, the only residential real estate with the lowest value included in the valuable house tax (Including the possession of usufruct right) (This provision is also applied to the part belonging to their shares, in case the specified persons own a single residence with a share.)
c) Residential real estates used as embassies and consulates belonging to foreign states and residential real estates for the residence of ambassadors and their messuages (provided there is reciprocity) and international organizations of which headquarters are in Turkey, representatives of international organizations related to residential real estate in Turkey.
d) Newly constructed residential real estates that are registered to the enterprises of those whose main field of activity is building construction and have not yet been subject to the initial sale, transfer or assignment. (Including residential real estate left by the contractor who undertook the contractual undertaking in construction works in return for land) (except in cases where this real estate is rented or used in other ways)
Ali KARAKUS
CPA , Independent Auditor
Jan 15, 2021
References
1- Official Gazette, dated 7.12.2019 and numbered 30971-7194 “Digital Service Tax and the Law on Amending Some Laws and Legislative Decree No.375
2- Real Estate Tax Law No. 1319
3- The Valuable House Tax Implementation General Communiqué published in the Official Gazette No. 31365, dated January 15, 2021
