Turkish Property Tax Information

Non Residents

Non-residents are taxed in Turkey on income arising from Turkish sources only and are liable to a number of other property related taxes outlined below. The tax year in Turkey is the calendar year and an individual is considered resident in Turkey if s/he spends 183 days or more in any tax year in Turkey.

There is an agreement between The United Kingdom of Great Britain and Northern Ireland and The Republic of Turkey for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains. But at present, Ireland and Turkey have not signed a Dual Taxation agreement but one is expected in near future. This will impact the tax implications on income received from Turkish property.

Taxes payable when purchasing a property in Turkey:

Turkish Transfer fees @ 1.5% are payable by both the buyer and the seller side on the sale of a property. These fees (i.e. 3% in total) are based on the declared value of the property. However, the declared value of the property cannot be lower than the 'tax value' determined by the local town hall, which is also used as the base of the property tax. 1.5% is also payable on the register of new buildings constructed on land.

The VAT rate in Turkey on the sale of property is 18%. But sales of houses which are below 150 meter square in net area, are subject to 1% VAT. If an immovable is owned by a company in Turkey, than selling this immovable after having held for 730 days (2 full years) might not be subject to VAT and corporate tax. This exemption also depends on some other conditions.

Turkish Stamp duty is levied on sale & lease contracts. The rates range from 0.15% - 0.75% and depends on the value of the contract.

Ongoing property taxes payable in Turkey are as follows:

Turkish Rental Income for a non-resident is taxed at scaled rates from 15% - 35%. Expenses directly related to the renting of the property are allowable as a tax deduction eg repairs & management fees.

There is also a lump-sum expense method, which allows the taxpayer to deduct 25% of the gross income as the expense without proving with documents.

Tax is deducted by way of a withholding tax. If a DTA comes into effect reduced rates of withholding tax may apply.

A Turkish tax return must be filed by 25th March with taxes payable in 2 equal payments – March & July.

Local Turkish Property taxes (rates) are payable in 2 equal installments – May & November. Rates are calculated based on the value of the property and are subject to thresholds set by the Tax Authorities as follows:

Residences 0.1%
Other buildings 0.2%
Land 0.1%
Farming land 0%
Vacant land (but allocated for construction purposes) 0.3%
Other applicable taxes are as follows:

Turkish Capital Gains Tax (CGT) arising from the sale of property is treated as income in the year of assessment. It is taxed at the marginal rate of 15% - 35%. A capital gain of upto TRY 6,800 in 2008 is exempt from CGT. Details of the disposal must be made within 15 days of sale. Property, if owned after January 1st 2007 and held for more than 5 years is exempt from Turkish CGT.

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

Worldwide income

If resident in the UK or Ireland you will have to declare any income receivd in Turkey in your annual resident tax return. There is a double taxation agreement between Turkey and the UK but not with Ireland so double taxation relief applies in the case of UK tax residents. Please contact us for further details regarding double taxation relief and/or filing your Resident Tax Return. Talks are underway between the Irish and Turkish governments to establish a Double Tax Treaty between the two countries but no definitte decision has been given at this time.

Property Tax International can organise the completion and filing of all necessary Turkish tax returns in addition to advising on your property tax obligations in your home country.

The information provided here is intended as a guide only. 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. 

Turkish Property Tax Rates And deadlines
Tax Year: January - December
 
Income Tax Rate: 15%-40%
 
Income Tax Deadline: 31 March
 
Capital Gains Tax Rate: 15%-40%
Wealth Tax: N/A
 
Dual Tax Agreement with Ireland: No 
 
Property Tax International Ltd is part of the ESS Group incorporating Taxback International and Taxback.com, which have been providing international tax advice since 1996

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