Non-residents are taxed in Turkey on income arising from Turkish sources only and are liable to a number of other property related taxes outlined below. The tax year in Turkey is the calendar year and an individual is considered resident in Turkey if s/he spends 183 days or more in any tax year in Turkey.
At present Ireland and Turkey have not signed a Dual Taxation Agreement but one is expected to come into force in 2007. This will impact the tax implications on income received from Turkish Property. There is a double taxation agreement between Turkey and the UK.
Taxes payable when purchasing a property in Turkey:
Turkish Transfer fees @ 3% are payable on the sale of property. This is paid by both parties and is based on the declared value of the property. 3% is also payable on the register of new buildings constructed on land.
The VAT rate in Turkey on the sale of property is 18%.
Turkish Stamp duty is levied on sale & lease contracts. The rates range from 0.15% - 0.75% and depends on the value of the contract.
Ongoing property taxes payable in Turkey are as follows:
Turkish Rental Income for a non-resident is taxed at scaled rates from 15% - 35%. Expenses directly related to the renting of the property are allowable as a tax deduction eg repairs & management fees.
Tax is deducted by way of a withholding tax. If a DTA comes into effect reduced rates of withholding tax may apply.
A Turkish tax return must be filed by 15th March with taxes payable in 2 equal payments – March & July.
Local Turkish Property taxes (rates) are payable in 2 equal installments – May & November. Rates are calculated based on the value of the property and are subject to thresholds set by the Tax Authorities as follows:
Residences 0.1%
Other buildings 0.2%
Land 0.1%
Farming land 0%
Vacant land (but allocated for construction purposes) 0.3%
Other applicable taxes are as follows:
Turkish Capital Gains Tax (CGT) arising from the sale of property is treated as income in the year of assessment. It is taxed at the marginal rate of 15% - 40%. Details of the disposal must be made within 15 days of sale. Property held for more than 4 years is exempt from Turkish CGT.
Turkish Inheritance Tax (IHT) rates vary from 1% - 30%. Tax on inherited property is deducted from the taxable value of the asset.
Property Tax International can organise the completion and filing of all necessary Turkish tax returns in addition to advising on your property tax obligations in your home country.
Property Tax International Ltd is part of the ESS Group incorporating Taxback International and Taxback.com, which have been providing international tax advice since 1996
