Turkey Rental Income Tax and Capital Gains for Foreign Property Owners in 2026

Foreign property owners in Turkey are subject to Turkish tax on rental income earned from Turkish property and on capital gains from property sales. Turkey's tax system for non-resident property owners is not particularly complex, but it is different enough from most Western systems that foreign owners regularly overpay, underpay, or fail to file entirely. All three outcomes create problems.

Tax Residency Status and Its Implications

Your tax obligations in Turkey depend on whether you are a tax resident. Under Income Tax Law (Law No. 193), you are a Turkish tax resident if you are domiciled in Turkey or if you spend more than six consecutive months in Turkey within a calendar year (temporary absences of up to three months do not break the continuity).

Non-resident foreign property owners are taxed only on Turkish-source income. This means rental income from Turkish property is taxable in Turkey regardless of where you live, but your worldwide income is not subject to Turkish tax. Tax residents, by contrast, are taxed on worldwide income. Most foreign property investors structure their affairs to maintain non-resident status.

Rental Income Taxation

The Exemption Threshold

Turkey provides an annual rental income exemption for residential property. For 2026, this exemption is expected to be approximately 33,000 TL (adjusted annually for inflation; the 2025 threshold was 21,000 TL). Rental income below this threshold is exempt from income tax.

However, this exemption applies only to residential rentals. Commercial property rentals do not qualify for the exemption. Additionally, the exemption is lost entirely if your total annual income (including rental income) exceeds a separate threshold, or if you earn rental income from more than one property and do not meet certain conditions.

The exemption sits in Article 21 of Income Tax Law No. 193, and two of its conditions catch owners out. It applies per taxpayer, not per property, so a second apartment does not bring a second exemption. And it is unavailable where the property is let through a company.

Tax Brackets for 2026

Turkey uses a progressive income tax system. The 2026 brackets (estimated based on the 2025 structure and projected inflation adjustments) are approximately as follows. Income up to 110,000 TL is taxed at 15%. Income from 110,001 to 230,000 TL is taxed at 20%. Income from 230,001 to 580,000 TL is taxed at 27%. Income from 580,001 to 3,000,000 TL is taxed at 35%. Income above 3,000,000 TL is taxed at 40%.

These brackets apply to your total Turkish-source income, not just rental income. The exact 2026 figures are set by the Revenue Administration (GIB) and published in the Official Gazette each December for the following year.

Deductible Expenses

Foreign owners can deduct legitimate expenses from rental income before applying the tax brackets. Turkey offers two methods for expense deduction.

The actual expense method (gercek gider yontemi) allows you to deduct documented expenses including property management fees, maintenance and repair costs, insurance premiums (including DASK), depreciation (2% per year for residential buildings), loan interest (if the property was purchased with a Turkish mortgage), property tax (emlak vergisi), and building management fees (aidat).

The depreciation figure comes from the Tax Procedure Law No. 213, which sets a 50-year useful life for buildings, hence the 2 percent annual rate. Utility costs borne by the landlord rather than the tenant are also deductible under this method.

The lump-sum method (goturu gider yontemi) allows you to deduct 15% of gross rental income as a flat-rate expense deduction, with no documentation required. This method is simpler but almost always results in a higher tax bill than the actual expense method for properties with significant ongoing costs.

You must choose one method at the beginning of the tax year and cannot switch mid-year. Most tax advisors recommend the actual expense method for properties with regular management and maintenance costs.

Filing and Payment

Non-resident property owners must file an annual income tax return (yillik gelir vergisi beyannamesi) by March 25 of the following year. Tax is paid in two installments: the first by March 31 and the second by July 31. Filing is done through the GIB Interactive Tax Office (Interaktif Vergi Dairesi) portal or through a certified public accountant (serbest muhasebeci mali müsavir, or SMMM).

You will need a Turkish tax identification number and, for online filing, an e-devlet (e-government) account or a digital signing certificate. Most foreign owners work with a local SMMM who handles filing on their behalf. SMMM fees for annual rental income filing typically range from 2,000 to 5,000 TL.

A non-resident owner can also appoint a tax representative (vergi temsilcisi) to file on their behalf. Register with the vergi dairesi and obtain the tax number before you start letting the property rather than at filing time, and keep expense receipts for at least five years, since the actual expense method stands or falls on documentation.

Withholding Tax on Commercial Rentals

If you rent your property to a Turkish company or a registered business, the tenant is required to withhold 20% of the gross rent as income tax and remit it to the tax authority on your behalf. This withholding is credited against your annual tax liability. For residential rentals to individuals, no withholding applies, and you are responsible for declaring and paying the full tax amount.

Capital Gains Tax on Property Sales

The Five-Year Rule

Under Income Tax Law Article 80, capital gains from the sale of real property held for more than five years are completely exempt from income tax. This is one of Turkey's most significant tax advantages for property investors. If you buy a property and sell it after five years, you owe zero capital gains tax regardless of the profit.

For properties sold within five years, the capital gain is calculated as the difference between the acquisition cost (indexed for inflation using the Domestic Producer Price Index (Yi-UFE)) and the sale price. The inflation indexing is applied if the index has increased by more than 10% between the acquisition date and the sale date, which, given Turkey's recent inflation rates, it almost certainly has.

Selling costs, including agent commission and notary fees, are deductible from the gain alongside the indexed acquisition cost.

This rule interacts badly with the citizenship-by-investment lock-up. A CBI buyer cannot sell for three years, so a sale in year four or five lands squarely in the taxable window. Holding past the five-year mark removes the liability entirely, which for most CBI investors makes a five-year plan rather than a three-year plan the sensible default.

Calculating the Indexed Cost

The inflation indexing mechanism significantly reduces your taxable gain. For example, if you purchased a property for 10,000,000 TL in January 2023 and the producer price index increased by 120% between then and your sale date in 2026, your indexed acquisition cost would be 22,000,000 TL. If you sell for 25,000,000 TL, your taxable gain would be only 3,000,000 TL rather than 15,000,000 TL.

This indexing mechanism has been particularly favorable for foreign buyers during Turkey's high-inflation period. However, note that the indexing applies to the TL-denominated purchase price, not to the dollar equivalent. Currency depreciation is not factored into the calculation.

Capital Gains Exemption Amount

For 2026, a portion of capital gains from property sales is exempt from tax. This exemption amount is adjusted annually and was 55,000 TL for 2025. The remaining gain after the exemption is added to your other income and taxed at the progressive rates described above.

Double Taxation Treaties

Turkey has double taxation agreements (DTAs) with over 80 countries, including most EU member states, the United Kingdom, the United States, Canada, Russia, and many Middle Eastern nations. The full list is maintained by the GIB.

Under most DTAs, Turkey retains the primary right to tax rental income from Turkish property and capital gains from the sale of Turkish property. Your home country then provides relief from double taxation, typically through either a tax credit (you offset Turkish tax paid against your home country liability) or an exemption (your home country exempts the Turkish-source income from domestic tax).

The specific mechanism depends on the DTA between Turkey and your country of tax residence. This is an area where professional tax advice specific to your situation is essential.

The treaties covering the largest buyer groups include Germany (1985, amended 2011), the United Kingdom (1986, amended 2010), Russia (1997), Iran (2002), and Iraq (2007). Treaty relief is not automatic. You have to claim it in your home country's return, with evidence of the Turkish tax paid.

Property Tax (Emlak Vergisi)

In addition to income tax on rental income, all property owners in Turkey pay annual property tax to the local municipality. Rates are set by Property Tax Law (Law No. 1319). Residential property is taxed at 0.1% of the declared tax value in most areas, and 0.2% in metropolitan municipalities (Istanbul, Ankara, Izmir, and other buyuksehir municipalities). Commercial property is taxed at 0.2% (0.4% in metropolitan areas).

Land is taxed at 0.1 percent (0.2 percent in metropolitan municipalities) and agricultural land at 0.3 percent (0.6 percent in metropolitan municipalities).

Property tax is paid in two installments: May and November. The tax base is the declared value, which is updated periodically and often lags behind market values.

Value Added Tax (KDV)

VAT is governed by VAT Law No. 3065 and applies to the purchase rather than the holding. New residential property sold by a developer previously attracted reduced rates of 1, 8, or 18 percent depending on size, location, and value. Those were reset in 2024 to a general 10 percent for qualifying new residential sales, with the standard 20 percent applying to larger or higher-value units. Resale of residential property by an individual is generally VAT-exempt, and commercial sales can attract 20 percent depending on the parties.

Foreign buyers can claim a VAT exemption on new property under Article 13/i of the VAT Law. The conditions are that the buyer has not been resident in Turkey for the preceding six months and that payment is made in foreign currency through the banking system.

What Bektu Provides

Bektu includes estimated tax obligation calculations for properties listed on the platform, based on current brackets, applicable exemptions, and typical expense ratios for the property type and location. These estimates help foreign buyers factor tax costs into their investment analysis before purchase. The platform does not provide tax advice and recommends consulting a licensed SMMM for specific filing obligations.

Sources: Income Tax Law No. 193, GIB Revenue Administration, Property Tax Law No. 1319, TUIK.