Turkish Rental Income Tax

So many people around the World want to buy property in Turkey. Some do it to support an immigration application, some do it as a residence permit when they visit, and some do it as income property. They rent their properties long or short term and earn money from the tenants.

As in most places, income from your property in Turkey is subject to rental income tax. Here's what you need to know.

Income Taxes in Turkey

As in most countries, there is a progressive income tax system in Turkey. This means that the percentage of tax you pay depends on your earnings. The more you win, the higher the percentage.

Income tax in Turkey starts at 15 percent and goes up to 40 percent for the most highest earners like luxury property owners. Real estate income in Turkey is part of the earnings calculation and the more you earn, the more tax you have to pay. Current tax rates are as follows:

Taxable Income Band

If you are not a resident of Turkey, you only have to pay tax on your income in Turkey. Thus, your taxes will not be calculated on your global earnings.

Property Tax in Turkey

If you are a property owner in Turkey, there are a few things you should know about rental income tax and the various types of taxes that may apply to your situation.

Property Income Tax in Turkey

If you own a property in Turkey and you get rental income from it, you are legally obliged to file a regular annual income tax return.

This is also a must for domestic and commercial rentals, so it doesn't matter if your tenants live or work on the property.

The rental income period applicable to your rental income tax is from March 1 to March 25 of the following year. At the end of this period, you must submit your income statement and pay the first installment of the rental tax on 31 March and the second in July.

If you plan to travel during the period of your rental income tax return and payment, you must declare and pay your rental property taxes 15 days before departure. If you inherited a rental property, you have 4 months after the original owner dies to file your rental income tax.

Rental income tax return can be submitted in person at tax offices in Turkey or you can file online. The documents are also available on the Turkish tax office's website, making it very easy to calculate income, deduct expenses and calculate your taxable income from the property. Rental income tax can be paid at tax offices and any bank in Turkey.

How is Rental Income Tax Calculated in Turkey?

As with normal income tax, the tax on real estate rental income in Turkey is also gradual. So, as with other income taxes, the more you earn from your rental properties, the more tax you pay.

Property tax

In addition to the rental income tax you obtain in Turkey, you will have to pay property tax on all the properties you own. These are determined and collected by the local municipality and vary from place to place, but are usually between 0.1% and 0.6% of the appraised value of the property each year.

Make sure you find out what the property taxes on any property you buy will be before you buy it so you can factor that expense into your calculations.

Valuable Housing Tax

In 2019, Turkey introduced a new type of tax that may apply to your real estate income in Turkey.

Known as the Valuable Housing Tax, this tax was not implemented until 2020, but since then, additional taxes have been levied on properties exceeding a certain value. Currently, these taxes are:

    3% for every amount above 5.25 million Turkish Lira, up to 7.87 million Turkish Lira

    6% in any amount from 7.87 million TL to 10.5 million TL

    If you own property worth more than $10.5 million, you are taxed at the flat rate of $22,500 plus 1 percent of the value over $10.5 million.

These calculations are based on the value of the property and are automatically due when you pay your taxes.