Recent press reports, including a column in the Turkish daily Hurriyet, have warned of a crackdown on tax dodging landlords. Although the practice is widespread in Turkey, there has been a particular outcry about foreign owners renting properties ?informally? from their home country, usually via word-or-mouth, websites or the classifieds, and not paying tax on the income. There have been increasing demands for action from hoteliers in the coastal resorts, who see villa rentals as a growing source of competition.
A recent declaration by the Turkish Ministry of Finance also suggests that the tax authorities will be clamping down and may be targeting foreign-owned properties in the future. ?Every property owner must be registered with the tax authorities, at which time they become a tax payer even if they are not residing in Turkey,? explains solicitor Ayse Ozcan of Acacia International. ?Income tax on the rental from their property is one of the taxes and should not be ignored.?
However according to Janet Crawley of online rental agency Villa Renters Turkey, Most owners simply aren't aware of the rules, otherwise they would do things legitimately. There are also practical problems, like finding an English-speaking solicitor.
Rental income must be declared annually, along with any other personal income earned in Turkey, with hefty fines, and interest liable on back taxes, for landlords caught not doing so. Income tax rates are currently 15-35%, but there is a personal allowance of 2,200 YTL and you can claim up to 25% of the gross rental income back in expenses for maintenance and repairs. A Turkish accountant can prepare your accounts for you, with payment due every year in March.
Dominic Whiting is a journalist and publisher of the Buying in Property Guides. For more information about buying property in Turkey, newsletters or to order the books visit: www.buyinginguides.info
