Capital Improvement in Turkey
Best Ways to Upgrade Your Home

Published on Dec 14, 2022
Updated on Mar 14, 2025
Kourosh Soleymani

Capital Improvement for Homeowners in Turkey

What is Capital Improvement? (And Why Should You Care?)

Imagine this: You buy a home in Turkey, and after some time, you decide to upgrade it. Maybe you add a new bedroom, install a modern kitchen, or build a swimming pool. These aren’t just simple changes—they increase your home’s value and can even help you pay less tax when you sell.

This is called capital improvement.

Now, you might be wondering, “If my home’s value goes up, won’t I have to pay more tax?” The answer is NO! In fact, capital improvements can actually reduce the tax you owe when you sell your home. Let’s break it down in a super simple way.

How Does Capital Improvement Help with Taxes in Turkey?

If you sell your home within 5 years of buying it, you have to pay Capital Gains Tax (CGT) on the profit you make. But here’s the trick: capital improvement costs are deducted from your taxable profit, so you pay less tax.

Let’s see two examples:

Example 1: Selling Without Any Improvements

You bought a home for ₺2,000,000
You sell it for ₺3,000,000
Your taxable profit = ₺3,000,000 – ₺2,000,000 = ₺1,000,000
You pay tax on ₺1,000,000

Example 2: Selling After Spending ₺500,000 on Capital Improvements

You bought a home for ₺2,000,000
You spent ₺500,000 on improvements (like adding a pool, new roof, or an energy-efficient system)
You sell it for ₺3,500,000
Your new taxable profit = ₺3,500,000 – (₺2,000,000 + ₺500,000) = ₺1,000,000
You pay tax on ₺1,000,000 instead of ₺1,500,000!

See the magic? Even though you sell the home for more, you don’t pay tax on the ₺500,000 you spent on improvements! The government lets you deduct those costs from your profit.

Capital Improvement vs. Home Renovation (What’s the Difference?)

Many people think capital improvements and home renovations are the same, but they’re not! Here’s the difference:

Capital Improvement	Home Renovation
Increases value and lifespan of the home	Makes the home look better but doesn’t add value
Examples: New roof, adding a room, solar panels	Examples: Painting walls, replacing carpets
Can reduce your taxable profit	Does NOT reduce your tax

So, if you just repaint your walls, that won’t help with taxes. But if you install a brand-new heating system, you can deduct it from your taxable profit!

How to Prove Your Capital Improvement Costs to the Government

Okay, you’re convinced—capital improvements can save you money on taxes. But how do you prove it to the Turkish government? Simple! Follow these steps:

1. Get Official Invoices (Fatura)

Always ask for official invoices from contractors, architects, or material suppliers.
The invoice must have your name, home address, and tax number (Vergi Kimlik Numarası).

2. Pay with a Bank Transfer or Credit Card

Avoid paying in cash! Use bank transfer or credit card so there’s a record.
Keep bank statements and receipts as proof.

3. Hire Licensed Contractors

Work with registered construction companies instead of informal workers.
Their invoices will be valid proof.

4. Get a Municipal Permit (If Needed)

If you make major structural changes (like adding a new floor), get approval from the municipality (Belediye Ruhsatı).

5. Get an Updated Property Valuation Report

A real estate valuation report (Gayrimenkul Değerleme Raporu) can help show how your improvements increased your home’s value.

When you sell your home, submit these documents to the tax office (Vergi Dairesi) to claim your tax benefits. If you don’t have proper invoices, the government won’t accept your expenses!

Why Should You Invest in Capital Improvements in Turkey Before Selling?

If you plan to sell your home in Turkey, capital improvements help you in two big ways:

Your home sells for a higher price
You pay less tax

Pro Tip: Even if you’re not selling soon, investing in capital improvements now means your home will have a higher resale value and lower taxes in the future. It’s a win-win!

How much is capital gains tax in Turkey?

In Turkey, Capital Gains Tax (CGT) is calculated based on your profit when selling a property. The tax rates vary based on how much profit you make:

Up to ₺70,000 profit → 15% tax
₺70,001 – ₺150,000 profit → 20% tax
₺150,001 – ₺370,000 profit → 27% tax
Over ₺370,000 profit → 35% tax

But remember! If you own your home for more than 5 years, you don’t have to pay capital gains tax at all!

How can I avoid capital gains tax in Turkey?

There are three main ways to avoid paying capital gains tax:

Hold the property for more than 5 years – If you sell after 5 years, you pay zero tax!
Invest in capital improvements – Deduct improvement costs from your taxable profit.
Use tax exemptions – Some properties (like primary residences) may qualify for tax breaks.

Smart Homeowners Make Smart Investments!

Now you know: Capital improvements don’t just make your home look better—they save you money on taxes and increase your profit when selling!

If you plan to renovate, keep your invoices, work with licensed professionals, and pay through official channels. This way, when you sell, you keep more money in your pocket instead of paying extra taxes.

Thinking about selling soon? Start planning your capital improvements today!

Found This Article Helpful? Share It with Others!

Get In Touch

quick link

Legal Information

Where to Find Us

Capital Improvement in Turkey Best Ways to Upgrade Your Home