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Income Tax on Turkish Property

  • 15 July 2020

To complete the purchase of Turkish real estate, you need to improve Turkish income tax laws and regulations related to assets applicable to foreigners. Whether you plan to earn rental income from Turkish property or to do business in Turkey, this article will briefly introduce Turkish property laws.

There are three different classes of taxes in turkey. These are:

  • Income tax
  • Taxes on wealth
  • Tax on expenditures

We will check all these contents and briefly explain what they are and how they affect your real estate purchase in Turkey and other projects in Turkey.

Income taxes in Turkey

Turkey's income tax is very similar to that of the US and the UK and many European countries. It includes property taxes.

In short, Turkey's income tax is progressive. Which means higher the income, the higher the tax rate. Turkey's total income tax rate varies from 15% to 35%.

Foreigners only have to pay tax on all income and income earned in Turkey (including real estate rental, employment income in Turkey, and income from doing business in Turkey). So, for example, if you buy a villa in Turkey and rent a house during peak summer days, you must pay income tax from the rent.

If you are a financier and are interested in investing in Turkey, you also need to pay taxes for it.

Tax rate explained based on your income in Turkey:

  • 0-10,000 TRY tax at 15%
  • 10,001-25,000 TRY tax at 20%
  • 25,001-58,000 TRY tax at 27%
  • 58,001 TRY and above tax at 35%

Taxes on expenditures

This tax includes the value-added tax (VAT) known as Katma Değer Vergisi (KDV) in Turkey. These costs are paid on imports and exports to Turkey. For example, if you start a company selling foreign products in Turkey, you must pay VAT for those products.

Similar to other countries around the globe, there is also a special consumption tax or sales tax under this group, and there are four main types of products that are affected:

  • Tobacco and alcohol
  • Automobiles including motor vehicles, boats
  • Petroleum and gas products
  • Luxury products

However, for most people who only want to buy a house in Turkey, this does not affect their life in Turkey, you do not have to worry.

Taxes on wealth

It includes property taxes in Turkey. Each year, as a Turkish real estate owner, you must pay taxes on the land and the property value of the land. Generally, their total amount is between 0.1% and 0.6%.

The total tax rate for Turkish property and land is 0.1%. Once you have finished the purchase of the real estate in Turkey, you can easily calculate the annual tax payment.

For example, if you buy a house in Turkey with a house value of 200,000 euros, you must pay a tax of 200 euros per year. It is worth noting that buyers and sellers must pay a fee equal to 2.2% of the declared value when buying or selling real estate in Turkey. It is called stamp duty and is a one-time payment.

For more information about these taxes, including the latest information and research information about buying a house in Turkey, please contact us or call us. We will assist you with Turkish tax laws when buying Turkish home.

 

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