Taxes in Turkey: A Comprehensive Guide for Property Owners and Investors

Understanding the tax landscape is crucial for anyone owning or investing in real estate in Turkey. This guide provides insights into “property taxes,” “income taxes,” and “rental income taxes” in Turkey, offering valuable information to both local and international investors.

Property Tax in Turkey (Emlak Vergisi)

Property tax, known as “Emlak Vergisi,” is a local tax levied on property owners. The rate varies depending on the property’s location and type. Residential properties in metropolitan areas are taxed at 0.2%, while those in other areas are subject to a 0.1% rate. For commercial properties, the rates are 0.4% in metropolitan areas and 0.2% elsewhere. This tax is payable in two installments annually, in May and November.

Income Tax on Real Estate Investments

Income generated from real estate investments in Turkey is subject to “income tax (Gelir Vergisi).” This encompasses rental income and any gains from the sale of property. The tax rate is progressive, ranging from 15% to 35% for 2023, and is applied to the net income after deducting allowable expenses such as maintenance, repair, and management fees.

Rental Income Tax and Withholding Tax (Stopaj)

Rental income earned from leasing property in Turkey is also taxable. For individual landlords, if the annual rental income exceeds a certain threshold (please check the latest threshold with the Turkish Revenue Administration), it must be declared, and taxes must be paid accordingly. The tax rate is progressive, similar to the income tax on other sources of income.

For corporate entities, rental income is taxed at the corporate tax rate, which is currently 22%. Additionally, a withholding tax, known as “stopaj,” may apply to rental payments. This tax is deducted at the source by the tenant and remitted to the tax authorities on behalf of the landlord. The rate for residential properties is 20% of the rental income, which can then be offset against the landlord’s annual tax liability.

VAT on Real Estate Transactions

Value-added tax (VAT) is applicable to real estate transactions in Turkey. The VAT rate varies depending on the size of the property and the type of buyer. As of 2023, rates range from 1% to 18%, with certain exemptions available for first-time buyers and properties below specific size thresholds.

Capital Gains Tax

Capital gains from the sale of a property in Turkey are subject to income tax. However, if an individual owns the property for more than five years, the gain is exempt from tax. For properties owned for less than five years, the gain is added to the owner’s other income for the year and taxed according to the progressive income tax rates.

We are ready to provide you with the necessary support regarding the real estate taxation system in Turkey with our leading consultants and lawyers.