The Legal Regulations & Taxes
Income taxes in Turkey works in a way that is very similar to the UK, USA, and various nations in Europe. This includes income tax on property. In simple terms – income tax in Turkey is progressive, meaning that the higher your income, the higher the tax rate will generally be. Income tax rates in Turkey vary from 15% up to 35% in total.
Non-residents are only required to pay income tax on all income and earnings earned in Turkey – including employment, rental income of your property in Turkey, and if you are running a business in Turkey. For example, if you purchase a holiday home in Turkey and you rent out the home during the peak months of the summer, you will have to pay taxes in the income you make from renting your home. If you are an investor and you earn interest on your investments in Turkey, you are liable to pay tax on these too.
Tax rate explained based on your income in Turkey:
• 0-10,000 Turkish lira is taxed at 15%
• 10,001-25,000 lira is taxed at 20%
• 25,001-58,000 lira is taxed at 27%
•58,001 lira and above is taxed at 35%
Income tax liability in Turkey depends on residency. If you are regarded as a Turkish resident, then you will be liable to pay income tax in Turkey. However if you are not a Turkish resident, then you are not liable to pay taxes in Turkey except for taxes on earnings derived in Turkey, such as real estate taxes.
Taxes on Expenditures
These include Value Added Taxes (VAT) – this is known as KDV in Turkish. These are paid on imports and exports to and from Turkey. If you are planning on setting up a business in Turkey that brings in foreign items to sell, for example, then you will have to pay VAT on those items.
Similar to other countries around the world, there is also a special consumption tax that falls under this category, and there are four key product types that are affected under this:
• Petroleum and gas products
• Automobiles and motor vehicles, including boats
• Tobacco and alcohol
Taxes on Wealth
This includes Turkey property taxes. Every year, as an owner of real estate in Turkey, you will have to pay taxes on the land and building values of the property. These normally rate at between 0.1% and 0.6% in total. Turkish property and land itself is taxed at 0.1% in total. Once you have completed your purchase of Turkish property, you can easily work out the tax you will have to pay per year on that. For example, if you purchase a home in Turkey and the value of the home is 200,000 Euros, then you will have to pay a fee of 200 Euros per year. One thing to note, is that once a property has been purchased or sold in Turkey, both the buyer and seller will have to pay a tax equal to 2.2% of the declared price – this is known as stamp duty and is a one off payment. For more information on these taxes, including the most up to date and sought out information on buying a home in Turkey, please contact us or give us a call and one of our friendly team members will be happy to assist you in the laws surrounding taxes in Turkey when you buy a home in Turkey.
Capital Gains Tax on Property Sale
Not to be confused with the 2.2% stamp duty that the buyer and seller must equally pay when a property in Turkey is sold, capital gains tax on the sale of your Turkish property is something entirely different. If you decide that you want to sell your property in Turkey within five years of the original purchase date – we recommend checking the date on the title deed if you are not sure – then you will have to pay tax on the sale of the property depending on how much profit is made from the sale.