Turkish Property Tax

Non-residents are taxed in Turkey on income arising from Turkish sources only. You are considered tax resident in Turkey if you spend at least 183 days there per year or if your main resident home is located in Turkey. 

will also be obliged to file a tax return detailing your worldwide income in your home (tax resident) country.

Where a double taxation agreement (DTA) exists between Turkey and your home country, which provides for double taxation relief, then a deduction for tax paid in the foreign country can be offset against tax on the same income in your home country. A double taxation agreement between Ireland and Turkey was signed in 2008. There is also a DTA between the UK and Turkey, therefore relief for double taxation applies for Irish & UK residents.

Tax on purchase:

VAT is generally charged at 18% (standard rate). Reduced rates are 1% and 8%. Commercial delivery of a residential property (usually new property sold by a developer) with net area of up to 150m2 is subject to VAT at 1%, residential properties over 150 m2 is subject to the standard VAT rate of 18%.

Transfer Tax : In the case of the sale of a property a 1% levy is paid on the sale value by both the buyer and the seller.  

Ongoing property taxes:

Turkish Income Tax (ITL) is levied on rental income received from Turkish Property. You can choose between a flat rate cost deduction of 25% from gross rents to arrive at taxable income or alternatively deduct actual costs including depreciation from gross rents. In both cases net income are taxed at rates varying from 15% - 35%.

For non-residents, withholding tax applies on rental income. The rate varies between 10% and 25%. It does not apply to residence of countries with which Turkey has a tax treaty agreement.

The tax year is 1 Jan—31 December. Advance income tax payments are made each quarter equal to 15% of profits. An annual tax return must be submitted by 31 March following the relevant tax year end.

Local Property Tax are payable each year on the value of land & buildings at rates varying from 0.1% - 0.3%. Local Property Tax returns are filed every four years and taxes are paid yearly in two equal instalments, the first in March - May and the second in November. 

Transfer taxes:

Turkish Capital Gains Tax (CGT) is levied on gains arising from the sale of Turkish property. Non-recurring gains are dealt with by the Income Tax law under the heading ‘Other Income & Earnings’ and are taxed at Income Tax rates ie 15-35% for 2012.

You will not be liable to Capital Gains tax in Turkey if you sell the property after 5 years (4 years if sold before 1 Jan 2007). However you will be subject to Irish CGT on the gain at 30% (2012).

Inheritance or Gift Tax is levied on the transfer of property on death or by gift. Rates depend on the relationship of the donor and beneficiary as well as the value of the property. Rates are progressive and range from 1—10% (Inheritance tax) and 10—30% (Gift or Succession tax). The first €100,000 is tax free when transferred between spouses.

Worldwide Income

If you are resident in Ireland or the UK, you will be obliged to declare and file your Turkish income in Ireland/ UK also. There is currently no double taxation agreement between Turkey and Ireland so relief for Turkish taxes paid will only be given as a cost deduction (not a tax offset) against Irish taxes payable on your Turkish income. There is a DTA between the UK and Turkey, therefore relief for double taxation applies.  

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