How to Pay Your Property Taxes in Turkey (2026 Guide for Landlords & Foreign Owners)

If you own residential or commercial real estate in Turkey and earn rental income, you may be subject to income tax on rental income under Turkish law.

Under the Turkish Income Tax Code, income derived from leasing property is classified as “real estate capital income” (gayrimenkul sermaye iradı)”. This guide explains:

• When rental income is considered earned

• Who must file a rental income tax return in 2026

• How foreign currency rents are calculated

• Available exemptions and deductible expenses

• How to file and pay your property-related income taxes in Turkey

• Penalties for non-compliance

This article is particularly relevant for foreign property owners, expats, and remote investors earning rental income in Turkey.

1. What Is Considered Taxable Rental Income in Turkey?

Turkish tax law explicitly lists which leased assets generate taxable income. The most common category is:

• Residential property (apartments, villas, houses)

• Commercial property (offices, shops, warehouses)

Income from leasing these properties is subject to Turkish income tax if the legal thresholds are exceeded.

2. When Is Rental Income Considered “Earned”?

Turkey applies the cash basis principle for rental income taxation.

Key Rule: Taxation Based on Collection

Rental income is taxed when it is collected, not when it accrues.

• ❌ Unpaid rent is not included in the tax return.

• ✅ Rent collected in 2025 for 2025 or earlier years is declared in the 2025 return (filed by March 2026).

• ❌ Advance rent collected in 2025 for 2026 or later years is NOT included in the 2025 return.

This timing rule is critical for landlords receiving lump-sum or prepaid rent.

3. How Is Foreign Currency Rent Calculated?

If rent is determined in a foreign currency (USD, EUR, GBP, etc.):

• The income must be converted using the Central Bank of the Republic of Turkey (CBRT) buying exchange rate

• The exchange rate used is the one applicable on the date of collection

If rent is received in non-cash form (goods or services), the income is valued based on its fair market value (precedent value – emsal bedel).

4. Who Must File a Rental Income Tax Return in 2026?

For income earned in the 2025 calendar year, the following individuals must file in March 2026:

A) Residential Rental Income

If annual residential rental income exceeds:

TRY 47,000 (exemption threshold)

You must file a return.

B) Commercial Property Rental Income

If gross rental income exceeds:

TRY 330,000 (filing threshold)

You must file.

Important:
When calculating whether the TRY 330,000 threshold is exceeded, you must consider:

• Commercial rental income

• PLUS the portion of residential rent exceeding the exemption

C) Rental Income Not Subject to Withholding

If total rental income not subject to withholding exceeds:

TRY 18,000

The full amount becomes taxable and must be declared.

Note:
Turkey does not apply family-based filing. Each individual property owner must file separately.

5. Residential Rental Income Exemption (TRY 47,000)

For 2025 income, the first:

TRY 47,000 of residential rental income is tax-exempt

However, you cannot benefit from this exemption if:

• You file a tax return for commercial, agricultural, or professional income

• Your total annual income exceeds TRY 1,200,000

• You fail to declare rental income or underreport it

Co-Ownership Rule

If a property has multiple owners:

• Each co-owner benefits separately from the exemption.

If one individual owns multiple residences:

• The exemption applies once to the total income, not per property.

6. Deductible Expenses: Lump-Sum vs. Actual Method

Turkey allows two methods for deducting expenses:

Option 1: Lump-Sum (Standard) Deduction

• 15% of gross rental income can be deducted.

• Applies to both residential and commercial properties.

• If selected, you must remain in this system for 2 years.

No documentation required.

Option 2: Actual Expense Method

You may deduct expenses listed under Article 74 of the Income Tax Code, including:

• Maintenance and repair costs

• Insurance expenses

• Loan interest related to the property

• Property taxes

• Depreciation

Important:
If you benefit from the residential exemption, you cannot deduct expenses attributable to the exempt portion.

The actual method is advantageous when mortgage interest and operating expenses are significant.

7. How to Declare and Pay Rental Income Tax in Turkey

Filing Deadline

Rental income tax returns must be filed by:

March 31 (following the income year)

Filing Method – “Ready Declaration System”

If your income consists only of:

• Salary

• Rental income

• Investment income

You can use the Ready Declaration System (Hazır Beyan Sistemi) via the Turkish Revenue Administration website.

The system:

• Prepares your return based on third-party data

• Displays it online for your approval

• Allows electronic submission

Payment Schedule

Income tax is paid in two installments:

• 1st installment: March

• 2nd installment: July

Payment can be made online, through banks, or tax offices.

8. What Happens If You Fail to Declare Rental Income?

Failure to declare or underreport rental income has serious consequences:

1️⃣ Loss of Exemption

The TRY 47,000 residential exemption is revoked.

2️⃣ Tax Assessment

Income tax is assessed on undeclared income.

3️⃣ Tax Penalty

A 100% tax loss penalty (equal to the tax amount) is imposed.

4️⃣ Late Payment Interest

Currently calculated at approximately 3.70% monthly.

5️⃣ Procedural Fines

Failure to file triggers a double first-degree irregularity penalty.

For foreign landlords unfamiliar with Turkish compliance procedures, this risk is significant.

9. Frequently Asked Questions (FAQ)

Do foreigners pay rental income tax in Turkey?

Yes. If the property is located in Turkey, rental income is taxable in Turkey regardless of the owner's nationality.

Is tax withheld for commercial tenants?

Commercial tenants generally withhold income tax at source. However, filing obligations may still apply depending on income levels.

Can rental losses offset other income?

Only within specific limitations and depending on deduction method.

Can I file remotely from abroad?

Yes. The Ready Declaration System allows online filing with Turkish tax credentials.

10. Strategic Tax Planning for Property Owners

If you are:

• A foreign property investor

• An expat landlord in Istanbul or other Turkish cities

• A digital nomad renting out your apartment

• A remote investor managing Turkish property

Proper tax structuring is critical.

Planning considerations include:

• Currency risk

• Deduction method selection

• Co-ownership structuring

• Double taxation treaty implications

• Cash flow planning for installment payments

Conclusion: Stay Compliant and Avoid Costly Penalties

Paying property-related income taxes in Turkey is not complicated — but incorrect timing, miscalculated exchange rates, or missed exemptions can lead to unnecessary tax exposure and penalties.

If your rental income is approaching filing thresholds, it is advisable to review:

• Whether you exceed the exemption limits

• Which deduction method is optimal

• Whether you have international reporting exposure

Need Professional Assistance?

If you are a foreign property owner or expat landlord in Turkey and want full compliance without risk, consider obtaining structured tax advisory support.

Professional assistance ensures:

• Accurate declaration

• Proper exemption use

• Strategic deduction planning

• Avoidance of penalties

• Full compliance with Turkish Revenue Administration requirements

Reach Us

info@ozmconsultancy.com