Turkey to Double the Tax Burden on Landlords

Photo: Aa.com.tr

Turkey is preparing one of the biggest property taxation reforms in recent years. Lawmakers from the ruling Justice and Development Party (AK Party) have submitted a bill to parliament. If approved, all landlords—both Turkish and foreign—will lose the existing tax exemption of 47,000 liras (about $1,120), reports Turkey Today.

According to the Ministry of Finance and Treasury, the overall tax burden on property owners will effectively double. Currently, most landlords pay a tax equivalent to about one month’s rent per year. After the reform, that figure could rise to the equivalent of two months—around 15,000 liras ($360) extra annually per property owner.



If the bill passes, the new rules will apply to income earned from 2026, and full mandatory declaration of rental income could become obligatory by 2027. The Ministry of Finance estimates that around 1.5 million out of 2 million landlords who used the exemption in 2024 will be affected, bringing the budget an additional 22 billion liras (about $520 million). The exemption will remain only for pensioners, widows, orphans, and people with disabilities. Others—including foreign investors—will have to file annual tax declarations.

Officials claim the reform ensures tax fairness and budget equality, while the Revenue Administration (GİB) clarified that no “new” rental tax is being introduced, but that existing exemptions are being withdrawn.



Under current rules, rental income (mesken kira geliri) up to 47,000 liras per year is tax-free and does not require declaration. Above that threshold, the owner must file a tax return in March of the following year and pay according to the applicable tax bracket. Exceptions do not apply to those earning commercial or professional income or those with total annual income above 1.2 million liras ($28,600) in 2025.

The draft law is published on the official government website for public review.

Currently, many landlords underreport income, claiming to earn less than 47,000 liras annually, often using paper contracts and cash payments. Authorities plan to close this loophole: by Q1 2026, all rental contracts are expected to be moved to a digital format, improving market transparency and combating undeclared income.

Critics warn that the reform will hit the middle class hardest and reduce Turkey’s investment appeal, as property ownership becomes costlier. If approved, by 2027 a typical landlord—local or foreign—will pay the equivalent of two months of rent to the state annually. Combined with rising utility, insurance, and maintenance costs, the reform could sharply reduce profitability. Add to this persistently high inflation, and rental returns are at risk of turning negative.

Inflation Risks: When Taxes and Prices Erode Rental Profitability

Turkey’s high inflation and stricter tax policy make traditional property rental increasingly unpredictable. Even with proper tax declarations, investors face triple pressure:
— rising mandatory payments (rental tax, insurance, utilities, and service fees);
— expense indexation outpacing rent growth;
— currency depreciation cutting real returns in USD or EUR terms.

As a result, even with steady occupancy, nominal gains are eroded by inflation and new tax obligations, leaving investors with shrinking or negative real returns.

Alternative: Dollar-Denominated Hotel Investments Abroad

An alternative to increasingly risky Turkish real estate is investing in hotel complexes with USD-pegged income, which reduces currency risk and simplifies cash flow planning.
— Dollar income eliminates exposure to lira volatility.
— International operators handle management, pricing, online sales, and service.
— Popular resort occupancy remains around 80% even in low season, supported by stable tourism growth (for example, in Gonio, Georgia).
— Premium branded hotel stock remains in short supply, maintaining strong demand and pricing power.

Case Study: Wyndham Grand Batumi Gonio

The Wyndham Grand Batumi Gonio hotel complex belongs to the luxury segment, managed by Aimbridge Hospitality, which operates over 1,500 properties worldwide. Owners are offered a guaranteed yield of 10% in USD, with potential to rise to 17% depending on occupancy (KPI) and ADR performance.

Key strengths:
— Premium positioning and limited high-quality supply in the region;
— Steady tourist inflow to Batumi;
— Year-round event and business activity balancing seasonality;
— Fast transaction process: ownership registration via the Public Service Hall takes just a few days, with no restrictions for foreign buyers;
— Russians and CIS citizens enjoy visa-free stays up to one year.

However, any “guaranteed yield” depends on contractual mechanisms. Before purchase, verify:
— who guarantees payments (developer, SPV, or operator) and what assets secure obligations;
— payment schedule, currency, and retention structure;
— management KPIs (occupancy, ADR, RevPAR) and liability clauses;
— early termination procedures and dispute resolution terms;
— ownership status and encumbrances in the public registry.