If you have a property in Turkey, in accordance with the Turkish tax legislation you must pay income tax from renting. The tax is paid in equal installments twice a year. Payment method: Bank or the Tax chamber.
The minimum rental income, which is not taxed, is:
For housing – 6,600 Turkish liras per year;
For commercial properties – 49,000 Turkish liras per year.
If your income exceeds these limits, the size of tax depends on the size of your rental income (minus the minimum non-taxed income):
In other cases, the amount of the tax depends on the size of the profit minus the minimum amount of non-taxable income:
- up to 22,000 liras - 15%;
- up to 49,000 liras – for 22,000 liras of income the tax is 3,300 liras, the rest of the sum – 20%;
- up to 120,000 liras - for 49,000 liras of income the tax is 8,700 liras, the rest of the sum – 27%;
- up to 600,000 liras - for 120,000 liras of income the tax is 27,870 liras, the rest of the sum – 35%.
- Over 600,000 liras - for 600,000 liras of income the tax is 195,870 liras, the rest of the sum – 40%
Progressive tax does not apply to legal entities who are owners of real estate and rent it out. They pay a fixed tax - 20%.
To pay income tax, you must be registered in the local tax authority and submit the income declaration within the period from March 1st till March 25th. This can be done by e-mail (in this case the date of acceptance of the declaration shall be the date of sending) as well as postal or courier service (date of acceptance will be the date of receipt of the declaration of the Tax Chamber).
Also, there are some factors that can lessen your tax burden.
- The income size can be lowered taking into account the average or actual expenses (if you provide expenses confirmation for the period of five years).
- You can lessen the rental income for 5% of the value of the property within five years after purchase.
- You have a right for deduction from rental income the amount paid on the loan if you got a mortgage loan to buy the property.
- You can pay imputed rent if you do not receive rental income or it is too small. The size of the imputed rent is calculated same as for the rental tax of such property, but cannot be less than 5% of its cadastral value.
- The tax authorities can take into account different insurance premiums (medical insurance, pension), the cost of treatment and education, charitable donations and etc.