Among the most frequently researched topics in real estate transactions are the “five-year rule,” capital gains from property sales, and post-sale tax liabilities. In particular, for property owners who sell a residence, land, or commercial real estate within five years of acquisition, the calculation of capital gains, the declaration process, and the applicable exemption thresholds have regained significance as of 2026. Within the framework established by the Turkish Revenue Administration (Gelir İdaresi Başkanlığı), gains derived under certain conditions must be reported through the annual income tax return.

In Türkiye, if a real estate asset—whether residential, land, or commercial property—is disposed of within five years from the date of acquisition, the gain derived from such sale is classified as “capital gains from the disposal of immovable property” under the Income Tax Law. This gain refers to the taxable difference between the acquisition cost and the sale price, calculated in accordance with statutory exemptions and valuation principles set out in the relevant legislation. According to the official guidelines issued by the Turkish Revenue Administration, such income is assessed under the category of “other gains and earnings” and must be declared via the annual income tax return where the legal conditions are met.

2026 Tax Filing Period and Capital Gains Declaration Process

According to the official calendar announced by the Turkish Revenue Administration, taxpayers who generated capital gains from real estate sales during the 2025 fiscal year are required to submit their annual income tax returns between 1 March and 31 March 2026. This declaration period covers not only capital gains arising from real estate transactions but also other income elements categorized as “other gains and earnings,” and it is conducted in full alignment with the official tax filing procedures.

A clear understanding of the declaration process is essential for property owners who have realized gains from real estate sales, both in terms of regulatory compliance and effective financial planning.

What Is the Five-Year (60-Month) Rule in Real Estate Sales?

The primary determining factors in the taxation of capital gains are the acquisition date of the property and the holding period prior to sale. Under the applicable legislation, the acquisition date is principally recognized as the official title deed registration date.

Accordingly, if a residential unit, land, or commercial property is sold before the completion of five years (60 months) from the date of acquisition and the gain derived from the sale exceeds the relevant exemption threshold, the income is subject to taxation as capital gains.

Conversely, gains obtained from the sale of real estate after the expiration of the five-year holding period are, as a general rule, not subject to income tax. From this perspective, the timing of a property sale becomes a strategic factor with direct tax implications in real estate investment decisions.

2025 Capital Gains Exemption Threshold

In line with the official regulations published by the Turkish Revenue Administration, the capital gains exemption threshold for the 2025 tax year has been set at TRY 120,000.

If the net gain derived from the sale, calculated after statutory deductions and necessary adjustments, remains below this threshold, the income is considered within the scope of the exemption. Gains exceeding the exemption amount, however, are subject to declaration in accordance with the relevant tax legislation.

Indexation and Deductible Expenses in Capital Gains Calculation

The calculation of capital gains is not limited to the simple difference between the purchase and sale prices. In accordance with the legislation, the acquisition cost, eligible expenses, and, where applicable, inflation indexation are taken into account in determining the “net gain.”

Indexation plays a particularly significant role in periods of high inflation, as it enables a more accurate assessment of the real economic gain. If the net gain calculated after indexation and deductible expenses remains below the exemption threshold, a tax liability may not arise.

Declaration Requirement for Gains Below the Exemption Threshold

One of the most common misconceptions in practice is the assumption that a tax return must be filed even if no tax liability arises. However, according to official guidelines, the key criterion is whether the net capital gain exceeds the exemption limit.

If the net gain remains below the exemption threshold, a declaration obligation does not arise. If it exceeds the threshold, the gain must be reported through the annual income tax return. This distinction is particularly critical for accurate tax planning in high-value real estate transactions.

Tax Treatment of Inherited and Gifted Properties

The method of acquisition is another decisive factor within the taxation framework. Real estate acquired through inheritance or by way of gratuitous transfer (such as donation or gift) is not evaluated within the scope of capital gains taxation.

Therefore, the five-year rule does not apply to such properties, and the gains obtained from their sale are generally not subject to income tax. This constitutes a significant tax advantage for investors holding inherited or gifted real estate assets

Payment Process for Declared Taxes

Where a capital gain is subject to declaration, the calculated income tax is paid in installments in accordance with the relevant tax legislation. The first installment is paid during the filing period, while the second installment is typically due by the end of July of the relevant year. This payment structure is fully aligned with the standard declaration and collection system stipulated under the Income Tax Law.

The Importance of Tax Planning in the Istanbul Real Estate Market

In a high-value and continuously evolving real estate market such as Istanbul, the timing of a property sale is not merely a commercial decision but also a strategic tax consideration. In premium locations such as Bebek, Nişantaşı, Zekeriyaköy, Beykoz, and the Bosphorus line, where property values are substantially high, the five-year rule, exemption thresholds, and capital gains calculations should be evaluated through a professional and analytical perspective.

Improperly planned sales may result in unnecessary tax exposure, whereas strategically timed transactions in compliance with the legislation contribute to preserving and optimizing investment returns.

Real estate is not merely a physical asset; when managed correctly, it becomes a long-term strategic investment instrument. At Space İstanbul, with 20 years of industry experience and a team of nearly 40 professional consultants, we adopt a holistic approach that encompasses not only portfolio selection but also sales strategy, market analysis, and regulatory compliance.

As one of the leading luxury real estate firms in Istanbul and Türkiye, we combine prestigious portfolio management, in-depth market expertise, and a strong corporate advisory perspective to ensure that investment decisions generate sustainable long-term value. A real estate investment managed with the right timing and the right strategy represents not only a refined living environment but also a structured and resilient financial future.

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