Rental Income Taxation in Turkey
Have you had rental income in 2019 for the property or properties that you have bought in Turkey ? If the answer is yes. You have some responsibilities such as declaring income tax statement and paying income tax.
For investment purposes or to get citizenship, you may have bought a property in Turkey.
But before explaining your responsibilities related to rent income, I want to give some information from holistic perspective.
What are the responsibilities regarding to your properties in Turkey ?
First responsibility is property tax. Even you do not have any income from your properties you have to pay property tax to municipality with two installments.
Property tax payment dates are; Every year you have to pay first installment at last May second installment is at last November.
How can you pay property tax ? At first you need to know which municipality do you have to pay property tax.
Which municipality you have to pay the real estate tax depends on the district where the real estate is located. After determining the municipality, you can pay to cashier of the municipality or you can pay via internet page of municipalities.
Question: I do not have title deed yet. Do I have to pay property tax ?
Answer: No you do not have to pay municipality property tax yet.
Quick Tip: If you buy a NEW house from a construction company. There is a tax advantage. If you apply municipality and submit a petition, for 5 years you have a right to pay 3/4 of property tax. Submitting petition is an obligation for this tax advantage.
2-Apartment fees or Equipment fees
Second liability is not a tax liability but at least as important as tax responsibility. For instance you have an apartment in Istanbul and find an appropriate tenant to rent. He is paying monthly rent amounts properly but he is not paying apartment fees. Unfortunately you could not say it is non of my business. According to Turkish laws for apartment fees you have a mutual responsibility with tenant. There fore please do not forget to check your tenant payments to site management or you can get service from a property management company
Especially for the new buildings site managements sometimes demand equipment fee beside monthly apartment fee. Please be informed that even you have a tenant, paying equipment fees to site management is your responsibility.
3-Income Tax liability for your properties in Turkey
You bought a property in Turkey for investment purposes and plan to sell. Will you have to pay income tax ? Or you buy a commercial real estate and rent. Do you have an obligation to pay tax ? Below I will explain each case and try to erase the doubts in your minds.
Question-1: I do not live in Turkey. Do I have to pay tax because of my rent gain.
Answer-1: Yes even you do not live in Turkey, you have to pay income tax for your rent earnings
Question-2: I do not have my title deed yet. Construction company will give within this year. Even I do not have title deep I rent my property and gain rent income. Do I have to pay income tax to Turkey ?
Answer-2: Yes even you do not have title deed, you have to pay income tax for your rent earnings.
It is boring I know but if you want to read, you can find the official explanation below (from tax office documentation)
Rental income from immovable property is mentioned in Article 6, titled “Income from Immovable Property” and Article 12, titled “Royalties” of Double Taxation Agreements that Turkey concluded. Article 6 of the Agreements mainly deals with income from leasing of immovable properties and related rights, and provides that the State where the immovable property is situated has the right of taxation. Accordingly, taxation of the rental income from the immovable property situated in Turkey of individuals resident in the other State will be in accordance with the procedure and principles of domestic legislation of Turkey and in these Double Taxation Agreements there is not any provision limiting the domestic legislation.
Question-3: When will I declare my rent earnings ?
Answer-3: Each year between 1 March and 25 March you have to declare your previous year earnings
Question-4: When will I pay income tax for my rent earnings ?
Answer-4: You can pay with two installments. First installment is at march second is July. But if you want, you can pay whole amount at march.
Question-5: I am paying credit for this immovables. Can I deduct interest payments ?
Answer-5: Yes you have a right to deduct credit interest payments from your revenues.
Question-6: I want to fulfill my all obligations regarding to my properties. Where should I start ?
Answer-6: Finding a local cpa can help you to handle this obligations easily.
In conclusion; as all we know after buying a property there is always some responsibilities.
In this article I try to summarize important issues, but if you still have doubts in your mind please do not hesitate to contact me
Serbest Muhasebeci Mali Müşavir