What gains can be attained through property? Are those gains taxed?

A real estate property may enable an individual to obtain two types of gains.

Firstly, you can rent it out and earn rental income. In that case, you are to pay a personal income tax. Please see the section regarding personal income tax below  for more information.

Secondly, the market value of your asset may rise and hence you can attain a gain. If you sell out your real property in the five-year-period following the acquisition date, you shall be subject to personal income tax based on the difference between the selling price and the inflation-adjusted acquisition price. Producer Price Index (PPI) is applied to acquisition price for Inflation adjustment excluding the months in which property is acquired and sold out if the inflation exceeds 10%.

For sales by individuals after the 5-year-period following the purchase, no personal income tax is charged on the gains to be attained.

If a property bought before 1st January 2007 (Title Deeds date) by an individual, is sold in the four-year-period following the acquisition date, the difference between the selling price and the inflation-adjusted acquisition price is subject to personal income tax as a capital gain. After four years, sales of these properties are not subject to personal income tax.

However, YTL 6,800 of the gain attained from sale is exempted from income tax starting from 1st January 2008. (YTL6,400 in 2007)

On the other hand, firms which are subject to corporate tax are exempt from any corporate tax relating to the real estate-based gains, real estate sale-and-acquisition levy, and VAT, if they sell a real estate that they have owned for at least two years and add the gains to their capital.