Can owners of apartments in Turkey receive regular passive income by renting out their apartments? They can! Therefore, investing in Turkish real estate in order to rent it out is a reasonable idea. You can rent out a seaside apartment in Turkey both for a short term (for tourists for at least period of two weeks) and for a long term (for permanent residents, the minimum rent term is six months).
In the first case, the income is high but seasonal. In the second case, the income is medium but permanent.
Content:
- Long-term rentals in Turkey
- Short-term rent in Turkey
- How to work with Real Estate agencies in Turkey
- How much can you earn from property rentals in Turkey in 2023?
- How is the rental income tax calculated in Turkey in 2023?
Long-term rentals in Turkey
Owners can rent out their houses in Turkey for a long term without the help of agencies. How does it happen? The tenant and the landlord conclude a lease agreement (the form can be bought at any stationery store in Turkey) and then notarize it. To do this, you do not need to speak Turkish – sworn translators work in the notary's office. Using this contract, the tenant can issue a residence permit, indicating the address of the rented apartment. In addition to the rent, the long-term tenant also undertakes to pay bills on time (water, electricity, and aidat).
The tenants can be locals and foreigners. As a rule, the rent is charged on a monthly basis (one month in advance). Along with the lease, the landlord may ask the tenant for a deposit – a fixed amount of money (equal to the cost of one or several months of rent). When the lease contract ends and tenant is ready to leave the apartment, the owner checks the safety of the property and furniture, and then returns the deposit to the tenant. However, if after the apartment needs repair and there are damaged things, then the owner withholds their value from the deposit.
Another thing to consider is that IOUs (sennet) are a common practice in Turkey. Before moving in, the tenant gives the landlord IOUs for each month of residence. After receiving payment for the next month, the owner returns one sennet to the tenant, etc. So the landlord additionally insures themselves against non-payment: an IOU can serve as a good reason in court.
Short-term rent in Turkey
If you are going to rent out your apartment to tourists for a short term and make money on it, you should keep in mind that it could be a rather complicated process to keep it legal. Therefore, a common option today is to entrust the rental business to a licensed agency. Why? At the beginning of 2017, a law came into force in Turkey regulating the short-term rentals. Since then, in order to legally rent out your apartment, you need to have a residence permit, be a legal entity (or Turkish private entrepreneur), and obtain a special license. It is reasonable to do all these things if you have several apartments and you are serious about your rental business. If not, then it is easier to contact a real estate agency and entrust them the management of your apartment.
Agency will take care of all the issues, including search, checking in, and checking out of tenants, as well as their legal registration. To register your apartment for rent, you need to get a special password from the police, register with the tax office, and then submit a monthly declaration (regardless of whether you had tenants in the current month). Each new tenant must be registered at the police station (using a password). In addition, when the next guest leaves, you need to issue an invoice, and then pay tax and VAT on the rent.
You can avoid that if you rent out your apartment to your relatives and friends without showing that they will be staying here free (many homeowners do this to save on the services of a licensed agency).
Who pays for utility bills when you rent out your apartment for a short term? A common practice among Turkish homeowners is to charge tenants for electricity and water (according to the meters), while paying for aydat (the cost of monthly maintenance of a residential complex) and replacing a gas cylinder is the homeowner's responsibility.
How to work with Real Estate agencies in Turkey
By concluding an agreement with one of the licensed agencies, the owner of real estate in Turkey completely entrusts it to realtors. On the one hand, it is very convenient: the agency is looking for tenants, pays the bills (utilities and aidat), reports to the tax office and provides the homeowner with detailed information on expenses, income and the number of tenants. On the other hand, some agencies can take advantage of the fact that you live abroad (rent an apartment without your knowledge, informing you that there are no people who want to rent it, not look after your apartment, underestimate the cost of rent, rent it out illegally and etc.). To avoid the above problems when renting your apartment in Turkey, you should choose a verified agency with a large and strong rental department. Remember that if there are one or two persons responsible for renting (who also deal with sales along the way), they simply will not have time to pay enough attention to your apartment. You can look for an agency on social networks: ask a question in city groups, and you will immediately receive real reviews about both trustworthy agencies and those who you should not deal with. The size of rent is determined by the owner of the apartment (based on the agency's recommendations), the agency's fee is added to this cost.
How much can you earn from property rentals in Turkey in 2023?
You can rent out your one-bedroom apartment in Istanbul for $1,600 per month. You can charge tenants about $1,800 for a similar residence in Alanya.
A 2+1 apartment of 75 m2 in Bodrum can be rented for $2,585. The owners of a 2+1 villa of 160 m2 in Kalkan, Antalya, rent out their housing for $3,400.
How is the rental income tax calculated in Turkey in 2023?
The most convenient option of working with a real estate agency is to sign an annual lease agreement with them. In this case, you will not have to personally register each tenant and pay tax in each individual case. You have to pay a single tax once a year.
How to calculate its size? Income tax is withheld if the annual rental income exceeds 21,000 Turkish liras ($1,030). The rate is calculated on a progressive scale and ranges from 15% to 40%.
- The income of up to 70,000 liras — 15%;
- The income of up to 150,000 liras — 10,500 liras are calculated up to 70,000 liras, and for the remaining amount — 20%;
- The income of up to 370,000 liras — 26,500 liras are calculated up to 150,000 liras, and for the remaining amount — 27%;
- The income of up to 1.9 million liras — 85,900 liras are calculated up to 370,000, and for the remaining amount — 35%.