Income tax on Turkish property

Many people around the world buy property in Turkey to rent out and earn money. If you own property in Turkey and are renting it out, you may have to pay income tax on your earnings.

The tax is progressive, meaning that the higher your earnings are, the more you will have to pay. In addition, there is a stamp duty that you must pay when filing your taxes.

Tax on Capital Gains

If you sell your Turkish property within five years of purchasing it, you will be required to pay a tax on capital gains. This is a mandatory tax and may result in you losing tens of thousands of dollars.

In Turkey, the sale of a real estate is subject to the so-called income tax law Article No 80. This is the only tax that is applied to sales of real estates purchased in Turkey before passing 5 years on the date of purchasing.

For the sale of real estates which were acquired free of charge, namely, by inheritance or donation, they are not subjected to this tax.

Buying properties in Turkey for private use is not very complicated, and there are various options for foreign investors. Moreover, they can purchase properties in any of the territories of Turkey except restricted military zones and the proceeds from the sale can be transferred out of Turkey.

Tax on Rental Income

The rental income you receive from your Turkish property is also subject to an income tax. This is calculated based on your income and the amount of any deductions you make from it.

There is a progressive taxation system in Turkey, and the more you earn, the higher your percentage of taxes. If you are an owner of a Turkish property, it is essential to understand how you will be able to calculate the tax you will have to pay on your earnings.

Those who are non-residents have to withhold income tax from the gross rent paid for the leased immovable property and rights at a rate of 20%. This includes the rent paid in advance for upcoming months and years as well.

Rental income from residential properties is taxed at a progressive rate of 15%, while profits from commercial properties are taxed at a fixed rate of 20%. Non-taxable amounts for residential property are no more than 9,500 Turkish liras per year, and for commercial properties up to 49,000 Turkish liras.

Tax on Non-Rental Property

If you are a foreign citizen living in Turkey, and are purchasing property in order to support your immigration application or to rent out as an income asset, you should know about the taxes that apply to your property. There are several types of tax that you must pay when purchasing or selling a Turkish property.

Tax on the Sale of Property

Turkish property owners are required to pay annual property tax, which varies by type and location. The rate of tax varies between 0.11% and 0.22% for residential properties, and 0.33% for commercial properties.

When purchasing a property in Turkey, buyers must pay an initial stamp duty or transfer tax, known as title deed conveyance tax (TAPU). This is normally split between the buyer and seller.

This is paid when the sale contract is signed and a title deed is issued. It is usually applied as 4% of the purchase price of the property, although it can be higher if there are special conditions.