TAX GUIDE FOR FOREIGNERS EARNING RENTAL INCOME IN TÜRKİYE

TAX GUIDE FOR FOREIGNERS EARNING RENTAL INCOME IN TÜRKİYE

If you rent out an apartment, residence, office, shop, plot, land or similar property in Türkiye, the income you earn may be taxable under Turkish tax legislation. Under Turkish law, such income is generally treated as income from immovable property. The scope is not limited to residences and workplaces; in certain cases, income arising from the letting of plots, land and certain assets or rights is also included. Foreign natural persons owning property in Türkiye must therefore assess carefully whether their rental income must be declared and which tax rules apply.

For foreign persons, the issue is not limited to whether rental income has been earned. The result may be directly affected by whether the property is used as a residence or workplace, how the rent is collected, whether the person is regarded as a full or limited taxpayer in Türkiye and, in certain cases, the provisions of double taxation agreements. It is therefore extremely important to structure rental income correctly from both a legal and tax perspective.

I. What Is Rental Income?

Under the Income Tax Law, income derived from letting residences, workplaces, plots and land is taxed as rental income. In practice, this may include a foreign person receiving monthly rent from a residence owned in Türkiye, letting a shop or office to a company, or granting the use of certain assets and rights. Such income is often considered separately for purposes of the annual income tax return.

For example, letting an apartment in Istanbul to a family for a monthly amount constitutes residential rental income. By contrast, if the same person lets an office in Ankara to a company, the income is regarded as workplace rental income. Although both fall within the general category of rental income, they are subject to different tax regimes.

II. Principal Difference Between Residential and Workplace Rental Income

The most critical distinction under Turkish tax law is whether the property is used as a residence or as a workplace. A specified exemption may apply to residential rental income. In the case of workplace rent, the tenant generally withholds tax at source. Consequently, two persons receiving the same amount of rent may face different tax outcomes depending on how the property is used.

For example, if a foreign owner lets an apartment in Izmir to a family, the income is treated as residential rental income. If the same owner lets a shop in Antalya to a company, the withholding and declaration rules applicable to workplace rental income also come into play.

III. When Must a Tax Return Be Filed?

The obligation to file a return depends on the type and amount of rental income. According to the current announcements of the Revenue Administration, an exemption of TRY 47,000 applies to residential rental income earned in 2025. For the same period, an annual return must be filed where gross workplace rental income subject to withholding exceeds TRY 330,000. The Revenue Administration has also announced that, for income to be earned in 2026, the residential exemption is TRY 58,000 and the declaration threshold for workplace income subject to withholding is TRY 400,000.

For example, if a foreign person earns only TRY 40,000 in rental income from a residence in Türkiye during the year, that person may not be required to file a return solely because of that income for 2025, since the amount is below the TRY 47,000 exemption. If the same person earns TRY 120,000 in residential rent, however, the exemption threshold is exceeded and a return becomes mandatory.

A similar assessment applies to workplace rent. If annual gross rental income is TRY 360,000 and is subject to withholding, the TRY 330,000 declaration threshold is exceeded and an annual return must be filed. The relevant amount is generally the gross rent, not the net amount received by the lessor.

IV. Application of the Residential Rental Income Exemption

The exemption for residential rental income means that income up to a specified amount is excluded from tax. This advantage applies only to residential rental income; it does not apply in the same way to workplace income. Even where rent is earned from more than one residence, the exemption is applied only once to the total income.

For example, if a foreign owner earns a total of TRY 200,000 from two apartments in Türkiye, the exemption is not applied separately to each apartment but only once to the total. It should also be remembered that the right to the exemption may be lost where residential rental income is not declared on time. Persons required to file must therefore pay close attention to statutory deadlines.

V. Withholding Tax on Workplace Rent

For workplace leases, the tenant generally deducts tax from the rent. This system is known in Turkish tax law as withholding or tax deduction at source. Even though a net amount reaches the lessor’s bank account, the tax calculation is generally based on the gross amount. Taxes paid during the year through withholding may be credited against the income tax calculated in the annual return. In some cases, a refund may also arise.

For example, if the monthly gross rent for a workplace is TRY 50,000, the tenant may apply the statutory withholding and pay a lower net amount. The gross rent is nevertheless taken into account when determining whether the annual declaration threshold has been exceeded. The assumption that no return is required merely because a lower amount reached the bank account may therefore be incorrect.

VI. Basic Principles Governing When Rental Income Is Earned

Under the Turkish tax system, the basic principle is that rental income is taxed when it is actually collected. Income is regarded as earned when the rent is paid or credited to the account. If rent relating to previous years is collected later in a lump sum, it is generally treated as income of the year in which it is collected. By contrast, rent for future years collected in advance is allocated to the relevant years. Where payment is received in foreign currency, the Central Bank’s foreign-exchange buying rate on the date of collection is used.

For example, if unpaid rent relating to 2024 is paid in a lump sum in 2025, it is treated as income for 2025. If rent for 2026 and 2027 is paid in advance in 2025, the amount is allocated to those respective years.

VII. Collection of Rent Through a Bank or PTT

Using a bank or PTT for rental payments is very important both for evidentiary purposes and for compliance with legislation. The Revenue Administration places particular emphasis on rent collections and payments being made through registered channels. Cash payments may later cause problems both in tax audits and in private-law disputes. Non-compliance may result in a special irregularity penalty under the Tax Procedure Law.

For example, where a tenant pays cash each month, the total amount collected, the month to which a payment relates and even whether payment was actually made may later become disputed. A bank receipt significantly reduces these risks.

VIII. Filing and Tax Payment Calendar

The annual income tax return for rental income is filed in March of the year following the year in which the income was earned. For example, the declaration period for rental income earned in 2025 is 1–31 March 2026. The calculated income tax is generally paid in two instalments: the first at the end of March and the second at the end of July.

This structure continues on the same basis each year, although monetary thresholds and certain technical details may change. Foreign owners should therefore verify the current thresholds separately every year.

IX. Deduction of Expenses From Rental Income

When calculating net rental income under the Turkish tax system, certain expenses may be deducted. There are two principal methods: the actual-expense method and the lump-sum expense method. Which method is more advantageous depends on the level of the person’s actual expenses and the availability of supporting documents.

A. Actual-Expense Method

Under the actual-expense method, expenses permitted by law and supported by documents may be deducted. These may include maintenance and repair expenses, insurance, property tax, management expenses and, in certain circumstances, interest on debt. Not every expense is deductible in the same way for every property; different rules may apply to residences and workplaces.

For example, assume that TRY 320,000 of rent is earned from an apartment and that documented expenses of TRY 120,000 are incurred for that apartment in the same year. If the actual-expense method is chosen, the portion of those expenses corresponding to the taxable part of the income may be deducted. Where expenses are high, this method is often more advantageous.

B. Lump-Sum Expense Method

Under the lump-sum method, a standard deduction is made at the statutory rate instead of submitting each individual document. This can be practical for persons with limited expenses or those preferring a simpler declaration process. It is not always the most advantageous method, however, and a numerical comparison should be made.

For example, where rental income is TRY 320,000 and actual expenses are low, the lump-sum method may offer a simpler solution. If there are substantial repair, tax, insurance or other allowable expenses, the actual-expense method may result in a lower tax burden.

C. Special Expense Rules for Residential Rental Income

Residential rental income is subject to certain special advantages and limitations. According to the Revenue Administration’s guide, five per cent of the acquisition price of one residence may, subject to specified conditions, be deducted for five years. Current announcements also state that, from 1 January 2025, interest on debt may be deducted in respect of rented assets and rights other than residences. The treatment of housing-loan interest must therefore be checked separately by reference to the relevant date and property type.

In addition, where the residential exemption is used, not all expenses are deductible; only the portion corresponding to the taxable part may be deducted. In other words, expenses for residential rental income benefiting from the exemption are apportioned rather than deducted in full.

D. Which Expense Method Is More Advantageous?

There is no single definitive answer. Where expenses are high and can be documented, the actual-expense method may be more advantageous. Where expenses are low or a simpler declaration process is preferred, the lump-sum method may be appropriate. The choice can have a substantial effect on total tax, particularly for persons earning both residential and workplace rent, owning multiple properties or letting recently acquired properties.

For example, for a person earning TRY 320,000 in residential rent and incurring TRY 120,000 in allowable documented expenses, the actual-expense method may result in a lower tax burden than the lump-sum method. By contrast, for a person at the same income level with very limited expenses, the lump-sum method may be simpler and more suitable.

X. What Should Be Done Where No Rental Income Is Earned?

In some cases, a foreign person may own property registered in Türkiye but receive no rent during the relevant year. In such circumstances, a notification such as “I did not earn rental income” may be submitted through the Ready Declaration System. This can help reduce unnecessary inquiry and audit risk arising from the appearance of the property in official systems.

For example, if your apartment remained vacant throughout the year and no rent was collected, tax does not arise automatically merely because the property is registered in your name. However, an explanation may be required to align the tax authority’s records with the actual situation.

XI. Income Tax Rates

Türkiye has a progressive income tax system. As income increases, the applicable rate also rises. Under the 2025 tariff published by the Revenue Administration, the rate is 15 per cent on the first bracket up to TRY 158,000, followed progressively by rates of 20 per cent, 27 per cent, 35 per cent and 40 per cent. Two persons with the same gross rental income may therefore pay different amounts of tax depending on the expense method chosen and the amount of accepted expenses.

XII. Why Is a Separate Legal Assessment Required for Foreign Persons?

Not every case involving a foreign person earning rental income in Türkiye is assessed in the same way. A person may be regarded as a full taxpayer in Türkiye or as a limited taxpayer taxable only on Türkiye-source income. In addition, where a double taxation agreement exists between Türkiye and the person’s country of residence, it must be analysed how the same income is treated in both countries. General information is therefore not always sufficient.

For example, where a person resident in Germany earns rental income from an apartment in Istanbul, the filing obligation in Türkiye must be considered together with reporting and credit possibilities in Germany. Likewise, the case of a person living in the Gulf region and letting a workplace in Türkiye requires a different analysis. In such matters, tax, immigration and contract-law aspects should be considered together.

XIII. Frequently Asked Questions

If I have only one apartment in Türkiye, must I always pay tax?

No. If your residential rental income is below the exemption threshold determined for the relevant year, you may not be required to file a return solely because of that income. The current threshold must nevertheless be checked each year.

If withholding tax has already been deducted from my workplace rent, must I still file a return?

In some cases, yes. If workplace rental income subject to withholding exceeds the declaration threshold for the relevant year, an annual return is mandatory.

What happens if I receive rent in foreign currency?

Even where rent is collected in foreign currency, the Central Bank of the Republic of Türkiye buying rate on the date of collection is used for tax purposes.

Can receiving rent in cash cause problems?

Yes. Collection through a bank or PTT is far safer for both evidentiary and compliance purposes; otherwise, a penalty risk may arise.

Which is more advantageous: actual expenses or the lump-sum method?

This depends on your expense structure. The actual-expense method may be preferable where expenses are high and documented; the lump-sum method may be more suitable where expenses are low and a simpler process is desired.

Conclusion

For foreign persons earning rental income in Türkiye, the most important matter is to identify the type of income correctly and fulfil the declaration obligation on time. Residential and workplace rental income are subject to different rules. The residential exemption, workplace withholding, choice of expense method, collection through a bank and the annual filing calendar must be considered together. Under current announcements, the annual residential exemption and workplace declaration threshold are TRY 47,000 and TRY 330,000 respectively for 2025 income, and TRY 58,000 and TRY 400,000 respectively for 2026 income.

Professional legal and tax support provides significant advantages, particularly for persons owning multiple properties, earning both residential and workplace rent, receiving rent in foreign currency, collecting previous years’ rent in a lump sum or residing abroad while owning property in Türkiye. A properly structured declaration process can substantially reduce unnecessary tax burdens and administrative risks.

Every case involving a foreign person earning rental income in Türkiye must be assessed according to its own circumstances. A definitive conclusion should not be reached without jointly examining residence status, the structure of the lease agreement, the method of payment, the use of the property and the international tax dimension. A professional case-specific assessment is therefore the safest course.