A new tax regulation has been announced in the Official Gazette no. 30971 on 07.12.2019 under the "Law on Digital Services Tax and Amending Some Other Laws" no. 7194 called "Valuable Residence Tax". According to this regulation, residences with a value of more than TRY 5.000.000 will be subject to valuable residence tax with different tax rates based on their value. Within this article, firstly the characteristics of the valuable residence tax will be evaluated and then the debates regarding the definitions and terms within the regulation, constitutionality of the Law and some questionable points will be analysed alongside the comparison of the valuable residence tax on an international basis.


  1. ubject of the Valuable Residence Tax
  2. According to Article 42 of the Real Estate Tax Law which was added with the Law no. 7194, the subject of valuable residence tax is; real property classified as residences which are located in Turkey with a value of not less than TRY 5 Million by means of building tax value or the value determined by General Directorate of Land Registry and Cadastre ("GDLR").

    Only residences with a value of more than TRY 5 Million will be subject to this tax and the total value of multiple residences one tax payer owns will not be taken into consideration. Thus, in case a tax payer has multiple residences, only the ones with a value of more than TRY 5 Million will be subject to this tax. On the other hand, if the tax payer has multiple residences but none of these have a value of more than TRY 5.000.000, there will be no tax liability.

  3. Valuation, Announcement and Finalization Regarding Valuable Residence Tax
  4. The valuation of residences subjected to valuable residence tax will be done by GDLR. The residences with a value of more than TRY 5 Million according to this valuation will be announced on the web site of GDLR and the owner will be notified. The point hereby which need clarification is the actual meaning of "building tax value".

    According to Article 29 of Real Estate Tax Law, the building tax value is determined based on minimal measure of the unit value, which also makes up the tax base. Building tax value is calculated based on the sum of the construction cost and the land or land share which are used with the building.

  5. Valuable Residence Tax Basis and Rate
  6. The tax rate is regulated differently based on the value of the residence;

    • Total Value of TRY 5 Million – 7.5 Million: 5 per thousand
    • Total Value of TRY 7.5 Million - 10 Million: 6 per thousand
    • Total Value of more than TRY 10 Million: 10 per thousand

    In case of a common ownership on a residence, the total value of the residence will be taken into consideration for the tax basis.

  7. Liability Regarding Valuable Residence Tax
  8. The liable parties for valuable residence tax are;

    • The owner of the residence,
    • Beneficial Owner,
    • " The user of the residence in case there are none of the parties mentioned above.

    Common owners shall be liable according to their share of the residence.

  9. Beginning and The Ending Of The Liability
  10. The liability of Valuable Residence Tax starts in the year following;

    • The date of valuation done by GDLR in which the value of the residence was determined above the limit.
    • The date of the ending of the exemption
    • The date of the arising of any reason which amends the tax value

    In case a valuation is made by GDLR in 2019 and the determined value of the residence is more than TRY 5.000.000 or without a valuation made by GDLR, the building tax value is over TRY 5.000.000, the tax liability regarding valuable residence tax starts in 2020.

    For the liability to start in 2020, the valuation and notification regarding this valuation must be done until 31.12.2019. Otherwise, the liability is going to start in 2021.

    If the residence subject to the valuable residence tax becomes exempted from the tax while the liability is ongoing, the liability ends as of the next instalment.

  11. vi. Residences Exempted From The Tax
    • Residences owned by the administration, municipalities and universities, including beneficiary ownership.
    • Residences owned by persons who own only one residence in Turkey and do not have any income except the social security payments, excluding people under the age of 18 who are dependent on people liable to look after them.
    • Residence owned by foreign governments which are used as consulates and embassies and residences assigned as the residence of the ambassador
    • Residences owned by international organizations based in Turkey and branches located in Turkey of the foreign international organizations.
    • Residences owned by companies whose main activity is construction and were not subjected to the first sale or transfer yet.
  12. Declaration of Tax and The Period and Place of Payment
  13. The building tax value and the result of the valuation done by the GDLR regarding the residence must be declared to the tax office located near the residence until the 20th of February of the following year of the valuation. Same proceeding must be done every year. The tax assessed and established by the tax office must be paid in two instalments; one in February and one in August. In case of a common ownership, shareholder may tender a common declaration or proceed solely.


The regulation on valuable residence tax has brought many problems alongside itself. The definition of "residence", enforcement period of the law and the beginning of the liability is among these uncertainties.

Since there aren't any given definitions for "residence" within the regulation, there is an uncertainty concerning residences caused by a difference between the official records and the actual state. It can be said that the official records will be considered and the interpretation of tax administration will be helpful regarding this issue.

Additionally, the relevant regulation came into force on 07.12.2019 and according to the provisions, the liability begins in the following year of the valuation. Based on this, in case a valuation is not finalized before 31.12.2019, normally the liability shall not begin in 2020, but considering the establishments done by the tax administration based on unfinalized valuations of 2019, unlawful tax establishments has been a matter of fact.

Also, the constitutionality of valuable residence tax has been a matter of debate concerning the following issues;

  • Only residences among the elements of wealth is being subject to tax,
  • The liability regarding valuable residence tax is determined based on the value of residence and not the person's financial status,
  • In case of common ownership, the value of the residence is taken into consideration instead of the value of the share,
  • The fact that residences which are subjected to valuable residence tax are also subjected to real estate tax which causes double taxation.

According to the international treaties which involve Turkey as a signing party, in case of an intervention to "property right" by means of tax, it must be analysed whether the intervention is lawful, there is a legitimate reason and a balance and proportionality between the intervention and the right. Within this scope, the important factor here is whether the procedural assurances are provided by the administration and the administration is abiding the "Good Governance Principles" or not. If the financial obligation arising from the tax weakens the financial status of the liable person, the property right might be violated.

According to some opinions, since the valuable residence tax rates have an increasing structure and the subject is actually wealth and not income, the property right is violated.


It is foreseen that the regulation on valuable residence tax is going to cause many problems with its current structure, thus, an improvisation regarding the practice, taxation technics and constitutionality would make it possible to be more appropriate regulation.

Originally published 30 April, 2020

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.