As soon as you read the title of the article “What is the tax surprise on the sale of real estate, is there a new tax on the sale of real estate?” you thought, didn’t you? Do not be alarmed right away, the Assembly is on vacation, it is impossible to enact a new law at the moment, so it is not possible to impose a new tax on real estate sales, at least until October when the Assembly will open!
However, in practice, there is no need to enact a new law regarding the taxation of a transaction – income, although there is a prohibition of comparison in taxation, it is possible to make taxation through interpretation within the framework of the existing provisions. There are many examples of this. If the interpretation in question is also approved by judicial decisions, the problem of legality disappears and becomes a fully-fledged regulation.
What is the definition of real estate?
Immovable property is defined as the goods that cannot be moved from one place to another in terms of their essential nature and therefore are fixed in place. The subject of the immovable property; land creates independent and permanent rights recorded on a separate page in the land registry and independent sections registered in the condominium registry (Turkish Civil Code No. 4721, Art. 704).
What is the tax surprise about the sale of real estate?
The tax surprise in the purchase and sale of real estate is about whether the sales gain is an increase in value or a commercial gain.
Well, do you know what is the most important measure that separates the two gains? The number of sales, yes, you heard it right, by looking at the number of sales you have made in a year or in successive years, it is decided whether your gain is an increase in value or a commercial gain. If the sales gain is recognized as an appreciation gain, only Income tax, if taxed as business profit Income Tax + VAT is happening.
Therefore, you need to know what the profit you will gain from the sale of real estate is before making the sale and act accordingly. If the income you earn after the sale is considered as commercial income, you may have to pay extra VAT that you did not receive from the buyer. In this way, it is out of the question for you to recourse the VAT you paid to the buyers later. Because, the Judiciary is of the opinion that you have made the sale including VAT, and you cannot demand VAT from the buyer afterwards!
In which case is there an increase in value gain in the sale of real estate?
Gains arising from the disposal of real estates acquired by real persons within 5 years from the date of acquisition are considered as capital gains and are subject to income tax. (GVK. Art. Mag. 80). If the immovable is sold after 5 years, the income is not subject to tax. In the calculation of the 5-year period, the calculation is made in days. However, the gratuitous acquisition of immovables is not included in the value increase gain. In other words, the income obtained if the immovables inherited by the person are subsequently disposed of are not considered within the scope of value increase gain.
In which case is there a commercial gain?
The earnings of those who are constantly engaged in the purchase, sale and construction of immovables are considered as commercial income and are taxed. (GVK. Art. 37).
In which cases is real estate sales income accepted as commercial income?
The nature of the gain arising from the disposal of the immovables, i.e. “valuation gain” is it, “commercial gain” It’s important to determine what it is!
The main factors that determine the commercial income in real estate sales; the activity is based on an organization of capital and labor and this in the organization’s operations continuity. This, exceeding the scope and limits of personal needs can be added.
If the immovable is sold within a commercial organization, there is commercial gain!
If the purchase and sale of real estate is carried out within a commercial organization, the income obtained commercial gain’Truck.
of an activity;
– Executed by being registered in the trade registry or
– The volume and importance required to keep commercial accounting, or
– According to the nature of the activity; capital or place allocation, personnel employment, undertaking marketing-oriented transactions such as advertising and promotion, outsourcing, supplying machines and vehicles for the job.
In such cases, by fulfilling all or part of these factors and conditions, the commercial organization is established with its form and material elements. Therefore, when the commercial organization clearly exists in its form and material elements, the activity carried out is of a commercial nature.
Finance only looks at the number of transactions (score) in the continuum!
If real estate is bought and sold continuously, although it is not carried out in such an organization, the income obtained is considered as commercial income. Continuity element is the process of transactions of a commercial nature in the same or separate fields of activity within an accounting period. more than one means to do. In other words, the most decisive criterion of the continuity factor is “Many in the number of profitable transactions”.
Finance, real estate purchase and sale is not carried out in a commercial organization, but the real estate;
– Same person on different dates,
– Different people on the same date,
– in successive years,
– Some of them are collected in the calendar year received, and the other part is collected again in the following calendar year.
is of the opinion that the sale of the property constitutes a presumption that it is constantly engaged in the purchase and sale of real estate, and the income obtained should be considered as commercial income. The interesting thing is that the Council of State agrees!
However, if there is no commercial purpose in the purchase and sale of real estate, if it is done for the purpose of meeting personal needs or protecting wealth, the gain obtained is considered as gain in value increase. Special attention is paid to this issue in judicial decisions.
More than one sale of inherited immovables is also considered commercial gain!
Yes, you heard it right, Finance taxes the sales of the immovables you inherited more than once as commercial activity and the income you earn as commercial income. It is useful to pay special attention to this issue when selling!
So, how many real estate sales are considered commercial gains?
In our country, where the real estate sector is so developed, there is no legal regulation on how many commercial gains will be counted in real estate sales made without relying on a commercial organization. In the continuity of real estate sales, if only the number of sales, that is, the score, is taken into account, this number should also be disclosed or regulated legally. Unfortunately, there is currently no set number of sales.
In motor vehicle purchase and sale, this number is limited to 3 in a year. So, for vehicles, it looks if more than 3 vehicles are sold in a year. (Regulation on the Trade of Second-Hand Motor Vehicles, Art. 5).
In our opinion, in cases where there is no commercial organization, the sale of real estate up to a certain number (for example, 3 units) per year should not be considered as commercial activity. In the past, a circular study was carried out on this subject, and it was stated in the draft text that the sale of up to 3 real estate would not be considered as a continuity. However, the draft Circular in question was not published.
Anyone who sells more than one real estate is at risk of tax!
Anyone who sells more than one real estate in the same year or in successive years is at serious tax risk if finances only move from the score. Even though 5 years have passed since the acquisition date, sales of more than one immovable are considered commercial activities and the earned income is considered as commercial income and is taxed at rates up to 35% in terms of income tax. In addition, since these sales are considered commercial activities, additional VAT of 1, 8 and 18% is requested from those who sell the immovables. Those who make their sales without VAT may be faced with the situation of paying the VAT they did not collect from the buyers out of their own pockets. It is impossible for them to collect these VAT by recourse to the buyers later.
Therefore, when selling your immovables, it is useful to think 40 times and decide by looking at the number of sales and taxation. Otherwise, you can have bulgur at home on your way to Dimyat for rice!