Once you’ve purchased on an investment property in Turkey you have the right to rent it out. There are three types of rentals all with different rules and procedures.
- Commercial Purpose Long term residence Short term rentals
To start with we recommend using a property manager if you are living out of Turkey to deal with any issues that may come up and a real estate agent to assist with the contract signing and negotiation period.
1. Renting for Commercial purposes in Turkey
As the landlord you will be required to pay taxes on income generated if the property is used for accommodation. If the property is rented out for business purposes the tenant must pay Stoppage Tax (Stopaj Vergisi).
Landlords pay annual taxes for the previous calendar year at the nearest tax office. These annual taxes are paid in two equal instalments, the first between March 1-25 and the second in July.
2. Long Term renting in Turkey
Long term renting in Turkey is straightforward. Long term renting is defined as a minimum of one month and with a legal contract. Often tenants will ask for small repairs and a fresh coat of paint before renting and if you agree they are expected to return the place in the same condition.
White goods and lighting fixtures are often not included in the rentals. Larger maintenance costs are usually subtracted from the rent while the tenant pays the monthly building or site fees (Aidat).
Communication is key here and make sure that expectations are discussed during the contract period. It is normal practice to pay the equivalent of one month’s rent as a deposit. If you use a real estate agent the tenant will pay a finder’s fee, usually the amount of one month’s rent or 12% of the annual cost. Annual rental increases are determined by the Consumer Price Index (TUFE) each year.
When terminating a contract, two-months’ notice is the norm. If you decide to sell the property, the tenant has six months by law under the new owner to leave the property if the contract is notarized or until the end of the lease if registered under the title deed registry office.
3. Short Term renting in Turkey
It is more complicated to rent Turkish real estate short term. The income generated in this case will be subject to commercial income tax. You will need a tax account, an accountant and keep solid financial records. You will need to register yourself and property with your local authority and obtain a trading license. Additionally, you will need to utilize the GIYKIMBIL system to register your guests with the police or gendarme. Income tax for the previous year will be payable like the annual rental income tax and there will be an 18% VAT on each rental.
For example, if a seasonal residence is rented to different people on a weekly basis, then the tax duty cannot be fulfilled with a single tax return. Think of it more as a hotel taxation system. Instead of yearly tax declarations, you will be following this monthly like any other commercial entity.
You must open an account with the Ministry of Finance and submit regular declarations throughout the year. As the property owner you are required to issue invoices and receipts and submit a monthly-3-month-annual return. There are many reputable real estate agents offering management services in Turkey.
As for tax rates, there are tax incentives such as discounted utility services and write offs for repairs. For rental properties with a net income between 0-13000 TL you will pay a Turkish income tax of 15%, it is 20% between 13,001-30,000 TL. You are expected to retain all related documents and receipts for five years.
Tenants should make rental payments into your bank account or at the PTT (post office) and it must be labeled as a “rental fee payment.” If the payment is under 500TL it is possible to receive payment in cash.
If you buy property in Turkey, not only will it be a good investment but you also have the opportunity to have a very lucrative rental property.
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