With Istanbul and Turkish coastal resorts now attracting rental premiums, and the property and investment press tipping Turkey as a rental property hot spot, many developers are now tailoring their builds to make the most of this growing market.
Quality villas, apartments and complexes are springing up throughout Turkey specifically aimed at those seeking maximum rental returns. Modern designs, plush interiors, additional facilities, special purchase offers and even rental guarantees are available on many Turkish properties for sale throughout the coastal resorts and major cities.
It is important to be aware that non-residents making any Turkish sourced income are liable to pay Turkish Income Tax. These rates do change, with a husband and wive's income taxed separately. Taxes are worked out on progressive rates based on the total net income.
Turkish Income from sources other than employment is worked out on a progressive scale. Income tax is subject to change annually:
Turkish Tax Rate on Rental Income*
Turkish rental properties classed as a ‘residence’(non-commercial) can receive a tax exemption on the first 3,000 TL net income. Net income is worked out via either a lump sum or deduction method:
Lump Sum Method
Please note that if this tax method is chosen, Turkish property owners cannot change to the deduction method within two years. This method is simple; to arrive at the taxable sum, simply deduct 25 per cent of the gross income from the leased property.
For the first five years of ownership, five per cent of the acquisition cost may be deducted from income obtained from the rental of the property. In addition, real expenses; i.e. water, heating, lighting, admin, insurance, repair and depreciation costs, can also be deducted from the gross rental income.
The Turkish Revenue Administration (GIB) provides an online email support service in English for tax related queries. Visit their website here
Turkish Value Added Tax (VAT) on Income from Turkish Rental Properties*
There is no VAT applied to income related to the rental of a property in Turkey by an individual. Companies and estate agents renting properties are subject to pay VAT.
Turkish Capital Gains Tax*
At present, there is no capital gains tax applied to immovable properties sold following a five year period. Normal income tax rates apply to those that wish to sell their properties within five years.
Please note: If purchasing a property with the intention to ‘flip’ or sell the unit on quickly, it is advisable to ensure that a full declaration of your purchase value is stated on the TAPU (title deeds) on purchase. In many cases, the TAPU shows a lesser purchase figure on the deeds. Taxable capital gains are derived by subtracting the initial purchase cost as declared on the TAPU from the agreed new selling price. The higher the capital gains, the more tax you pay within the first five years.
*Although every care has been taken to ensure that the information we provide is correct, the information on this page is for general guidance purposes only. We strongly advise that you consult a qualified legal advisor for a current and accurate assessment of your needs.
For more information on property taxes in Turkey, please contact us below.