18.02.2026 09:01
The annual declaration process for those earning income from the sale of residential properties and land begins on March 1. Capital gains arise from sales made within 5 years from the acquisition date, and if a declaration is not submitted, tax penalties and late fees are applied. Here are the details and an example calculation.
There is an income tax liability on the profits obtained from the sale of real estate such as houses, land, and similar properties. According to Article 193 of the Income Tax Law, if individuals sell a property they have purchased within 5 years from the acquisition date, the profit generated is taxed under the "capital gains" category.
Many people are unaware of this regulation, so they do not submit their tax returns on time and may face high tax penalties.
THE DECLARATION STARTS ON MARCH 1
Those who sell real estate within the 5-year period in 2025 must report the profits they have obtained in the annual income tax return in March 2026. The calculated tax is paid in two equal installments in March and July. If the declaration obligation is not fulfilled, penalties and late interest are applied in addition to the original tax.
5 YEARS IS A CRITICAL PERIOD
In tax practice, the 5-year period is calculated based on the calendar day. If the property is sold before the 5 years are completed, income tax arises; however, no capital gains tax is applied on sales made after the completion of the 5 years.
Tax is not only applicable in classic sales transactions; it also comes into play in transactions such as the transfer, assignment, exchange (swap), expropriation, nationalization, or contribution as capital to commercial companies of the property.
NO TAX ON INHERITED PROPERTIES
According to the information provided by the Ministry of Finance, capital gains tax is not applied on the sale of houses and lands acquired through inheritance.
INDEXATION METHOD IS APPLIED
When calculating tax, the difference between the sale price and the purchase price is not taken directly into account. First, the purchase price is updated according to the Domestic Producer Price Index (D-PPI) increase rate. If the increase rate is over 10%, indexation is applied, and the taxable profit is determined accordingly.
For example; if a house purchased for 5 million lira in December 2023 is sold for 8 million lira in August 2025, capital gains are calculated because the 5-year period has not expired. The purchase price is updated considering the D-PPI rate, and income tax is calculated based on the resulting difference. The Revenue Administration also explained in its published guide that if a property purchased for 6 million lira is sold for 9 million lira before one year is completed, the profit obtained will be subject to tax.
HOUSES BUILT ON COOPERATIVES AND LAND ARE ALSO INCLUDED
In residences acquired through cooperatives, the actual usage date and the date when electricity and water subscriptions began are taken as the basis. In houses built on land, the date when the type correction is made in the title deed is considered the acquisition date.
If residences built on land within the scope of urban transformation are sold within 5 years, an income tax liability arises.
Experts warn that especially in high-value sales, the tax amounts that may arise can reach serious levels, emphasizing that the duration and calculation conditions should be carefully examined before the sale.
EXAMPLE CALCULATION
Purchase date: February 2022
Purchase price: 3,200,000 TL
Sale date: September 2025
Sale price: 6,500,000 TL
Since the property is sold before the 5 years are completed, capital gains arise.
D-PPI INDEXATION CALCULATION
February 2022 D-PPI: 1,150.00
D-PPI before the sale (August 2025): 3,220.00
Increase rate: (3,220 – 1,150) / 1,150 = 180 percent
Since the increase rate is over 10%, indexation is applied.
Indexed cost price:
3,200,000 × (3,220 / 1,150)
= 3,200,000 × 2.80
= 8,960,000 TL
TAXABLE PROFIT
Sale price: 6,500,000 TL
Indexed cost: 8,960,000 TL
In this example, since the sale price is below the indexed cost, no tax arises. In other words, the effect of inflation eliminates the profit.
SECOND SCENARIO (TAXABLE SITUATION)
Let’s assume the same property is sold for 9,500,000 TL.
Sale price: 9,500,000 TL
Indexed cost: 8,960,000 TL
Profit: 9,500,000 – 8,960,000 = 540,000 TL
This amount is taxed according to the income tax tariff.
A progressive tariff is applied, and tax may range from approximately 15% to 40%.
For example, assuming it falls into the average 20% tax bracket:
540,000 × 20% = 108,000 TL income tax
The tax is paid in two equal installments in March and July.