Turkish Property Related Taxes

Property Taxes in Turkey - Turkish Tax Overview.

Non Residents

The Turkish tax authorities tax nonresident property owners on their Turkish sources of income only. An individual is considered resident in Turkey for tax purposes if s/he spends 183 days or more in any tax year (calendar year) in Turkey.

The following taxes are payable when purchasing a property in Turkey:

Property Transfer Fees

The property transfer fees are payable by both the buyer and seller.

The fees are based on the declared value of the property but this must not be less than the tax value as set by the local town hall in Turkey, which is also used as the base of the property tax.

The following ongoing property taxes are payable in Turkey:

Turkish Rental Income – Turkish rental income is taxed from 15% -35%.

Deductable expenses from Rental Income - Allowable expenses:

• Management fess,
• repairs to the property directly related to the rental period. Actual receipts and invoices will be required.
• Utility bills,
• Some legal costs associated with the letting (if damage occurred by the tenant).
• Mortgage interest is allowable as a deduction.

Flat Rate Expenses Method – A flat rate tax method is available where the tax liability is calculated at 25% of gross income without any allowable deductions.

Turkish Tax Return Deadline

A Turkish income tax return must be filed between March 1st and March 25th each year. Tax payments are due in 2 equal instalments in March & July.

Local Turkish Property taxes (rates)

Local taxes are payable in 2 equal instalments – May & November. This tax is payable by the owner of the property if the property is not rented.

Payments are generally made directly to the town hall. Rates vary and are applied by the local town hall or local municipality.

Turkish Capital Gains Tax (CGT)

Turkish Capital Gains Tax rates vary from 15% - 35% and is payable after the sale is complete and if a gain has been made. Capital gains are treated as income and taxed at the same income tax rates highlighted above.

If the property was bought before January 2007 the CGT would be the difference between selling price and adjusted inflationary purchase price. A tax free allowance of 7,700 TRY applies in 2010.

After the sale is complete the seller has to provide details of the transaction within 15 days or heavy penalties will apply. Properties held for more than 5 years are exempt from Turkish CGT but you still may be liable to CGT in your home country.

Turkish Inheritance Tax (IHT)

Turkish Inheritance rates vary from 1% - 30%. Tax on inherited property is deducted from the taxable value of the asset.

Property Tax International specialise in the preparation and filing of Turkish income tax returns for non-resident property owners.

Worldwide Income

Most countries require their tax subjects to declare all their worldwide income (including rental income from an overseas property investment) within their annual income tax return.

Turkey has a double tax treaty with a substantial number of countries around the world. Most double tax treaties provide relief for taxes paid in one country against tax due on the same income in the taxpayer’s tax resident country.

Property Tax International strongly recommends that you check with your resident tax authority if a double tax treaty exists and what income is covered under the agreement.

While Property Tax International Limited makes every effort to ensure that the information contained herein is accurate, we take no responsibility or liability for any inaccurate, delayed or incomplete information, nor for any actions taken in reliance thereon. The information provided above is intended as a guide only.