Valuable House Tax (“VHT”) becoming a part of our lives almost a year ago with the Law Numbered 7194 on the Digital Service Tax and the Amendment of Certain Laws and Law Decree Numbered 375 has made a tremendous impact following the first regulation; and has been criticized in terms of high values of houses determined by the General Directorate of Land and Cadastre in particular. 

After all these discussions, the controversial provisions of VHT have been changed and the implementation of VHT has been postponed so that the obligation would be effective at the beginning of the year 2021 with the Law Numbered 7221 on Geographical Information Systems and the Amendment of Certain Laws which entered into force by its publication in the Official Gazette dated 20 February 2020. This period of one-year postponement passed fast and the beginning of the VHT obligation is close. In this context, we would like to share with you the notes that we have prepared for reminding the obligations in relation to the VHT.

Taxpayer: Owners, if available usufruct right holders, or those making dispositions of the residential immovable property in the absence of an owner or a usufruct right holder, of residential immovable properties located within the borders of Turkey and with a building tax value exceeding TRY 5.000.000 will be VHT taxpayers regardless of their status as a real person or a legal person.

Whether these houses are already used as residence or not, the house is rented or not, or how it is acquired is not a consideration.

Building tax value of these houses and the number of residential immovable properties owned by the person are essential.

Houses with a building tax value lower than TRY 5 million are not in the scope of VHT. As can be seen, while the previous regulation was based on the values determined by the General Directorate of Land and Cadastre, new regulation is based on the building tax value which is a basis of the property tax. The values which were determined by the General Directorate of Land and Cadastre and litigated before the courts by the house owners, have been annulled and will no longer be legally valid.

Therefore, those expecting to be a VHT taxpayer should first identify the building tax value of the immovable property which is also the basis of the property tax.

Exemption: In case the owner of the immovable with a building tax value exceeding TRY 5 million has only one immovable property, that immovable property will be exempt from VHT pursuant to the exemption article regardless of its building tax value.

In addition, in case a person has more than one residential immovable property within the scope of VHT, one immovable which has the lowest value will also be considered within the scope of exemption.

Tax Base and Ratio: VHT shall be calculated for 2021 according to the table below:

Declaration and Payment: If the one-year extension is not applied by the President, first declaration for VHT shall be submitted to the tax office where the residential immovable property is located by 20 February 2021 and VHT shall be paid by two installments until the end of February and August, 2021. However, the

Ministry of Treasury and Finance is authorized to extend the periods for declaration and payment up to 3 months.

VHT will be accrued annually and taxpayers should declare tax for each of the following years.

For example, VHT amount to be paid by a real person owning four residential immovable properties with the building tax values of TRY 4 million, TRY 6 million, TRY 8 million and TRY 12 million will be calculated as follows:

• First of all, immovable with the value of TRY 4 million is outside of the scope of VHT since the building tax value is lower than TRY 5 million.
• For the immovable properties with a value exceeding TRY 5 million, the immovable property having the lowest value will be considered as also exempt and therefore, there will be no VHT payment for the immovable property with the building tax value of TRY 6 million.
• For the rest of the immovable properties with the values of TRY 8 million and TRY 12 million, taxpayer will have to submit the declaration to the tax office where the immovable property is located by 20 February 2021 calculated according to the basis and tax ratios listed above.
• Pursuant to the ratios listed above, taxpayer will have to pay TRY 10.500 for the immovable property with the value of TRY 8 million and TRY 42.500 for the immovable property with the value of TRY 12 million as VHT.