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Is it necessary to pay a tax for renting out the property?

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: in March and July. Payment method: Bank or the Tax chamber.

Minimum income, which is registered in the legislation for the tax exemption is:

  • 2 600 TL per year (approximately € 1300) from renting of residential property;
  • 22 000 TL per year (approximately € 11,000) from the rental of commercial real estate.

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 8700 liras - 15%;
  • from 8700 liras - 20% of the 1,305 liras;
  • 22 000 liras - 27% + 3965 liras;
  • 50 000 liras - 35% + 11 525 liras.

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 in 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, you should be aware of factors that can lessen your tax burden.

  1. You can average the income amount (25% of income) or the actual amount of spending (there must be documentary evidence for five years).
  2. You can lessen the rental income for 5% of the value of the property within five years after purchase.
  3. You have a right for deduction from rental income the amount paid on the loan if the mortgage was taken.
  4. 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.
  5. The tax authorities can take into account the different insurance premiums (medical, pension), the cost of treatment and education, charitable donations.

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