Turkish Rental Income Tax Tips for Investors

If you own property in Turkey and earn rental income from it, it's important to understand the tax obligations. Turkey has a progressive tax system, which means the tax rate increases as your income rises. Here's a detailed breakdown of what you need to know about rental income tax in Turkey.

Income Tax Rates in Turkey

Turkey imposes income tax on all earnings, including rental income from property. The rates are progressive, varying from 15% to 35%. For non-residents, only income earned within Turkey is taxable. This includes rental income, business income, and interest on investments.

Income Tax Brackets:

• 0-10,000 Turkish Lira: 15%
• 10,001-25,000 Turkish Lira: 20%
• 25,001-58,000 Turkish Lira: 27%
• 58,001 Lira and above: 35%

Business Tax for Holiday Rentals

Since 2018, property owners who rent out their homes must obtain a business license (Vergi Levhasi) and pay business taxes. This change distinguishes rental businesses from sole traders. Business tax rates are also progressive, with annual exemptions available. Hiring a local accountant to manage your monthly filings can simplify the process.

Deductions on Turkish Income Tax

You can reduce your taxable rental income by deducting certain expenses. These include:

• Maintenance and Wear and Tear: Costs for maintaining and repairing the property.
• Insurance: Property insurance premiums.
• Property Management Fees: Fees paid to management companies.

Taxes on Expenditures

Turkey imposes Value Added Tax (VAT), known as KDV, on imports and exports. While this primarily affects businesses dealing in foreign goods, it's important to be aware of if you plan to start a business in Turkey. Special consumption tax applies to certain products, but this usually doesn't impact property buyers.

Taxes on Wealth in Turkey

As a property owner, you must pay annual property taxes, ranging from 0.1% to 0.6% of the property's land and building values. For example, a property valued at 400,000 Euros incurs an annual tax of 400 Euros.

Stamp Duty

When buying or selling property in Turkey, both the buyer and seller must pay a stamp duty of 2.2% of the declared property price. This is a one-time payment due upon the transaction's completion.