Tax on sale of property less than 5 years

Determining Gains from Value Appreciation

According to income tax law, with the exception of instances where properties are acquired free of charge by individuals, the profits arising from the transfer of real estate (workplace, residence, land) within five years from the date of purchase are subject to the law on value appreciation. The five-year period for calculating the gain starts from the date of purchase of the property.

The value is calculated based on the acquisition cost of the property and the amount transferred, less the expenses incurred in disposal as well as any taxes and duties paid, which are the responsibility of the seller.
If the acquisition cost is not determinable, the price assessed by the evaluation commission under the provisions of the tax procedural law will be used instead of the acquisition cost, as well as the value recorded in the latest balance sheet or inventory records for businesses whose income is determined based on the balance sheet or operating account.

Example:

1. A person sold a property purchased last year for 400,000 lira at a price of 500,000 lira in the current year. Accordingly, since the person sold the mentioned property within five full years from the date of purchase, the profit obtained will be subject to value appreciation tax.

2. A person sold an apartment inherited three years ago on 2023/01/16. The income derived from this sale, due to the free transfer (inheritance) of the apartment, will not be subject to capital gains tax.