Just thought I should share some very useful information with all the members who rent out their properties.
As I have had a few headaches and a lot of stress over renting, but have now got everything in order so perhaps this will help others avoid having any problems.
Basically it all started on Boxing Day, when the "Baskan" site manager, who is elected yearly on our complex came to my house Boxing Day, ranting and raving about people renting out their properties. He had printed out all the pages from my web site, and also all of the other owners who advertise on the internet. And he said he was collecting "evidence" to take to the Jandarma about anyone who rents their properties.
Basically saying we are running it as a business, and wants to know are we paying tax and he would not believe me, when I explained that there is an agreement between Turkey and the UK, so you do not pay double taxation.
So I am now fuming, and a little upset ( understatement!)
My property manager had been there translating for me, and also arguing the point on my behalf, and the other people on the complex that she also represents.
The next stage for us was to find out exactly what the legalaties were, and were we infact doing something wrong.
First step, we went and got tax numbers which took all of 10 minutes and cost nothing. This just meant we took our passports to the tax office, completed the forms, and we then both received our tax numbers. All very painless, and we should have done this before now.
Next step, we spoke to our local Jandarma, who actually wanted us to make a complaint about our "Baskan" as he says he is harassing us, and there is no a problem at all, about having guests stay in our apartment. But by law in Turkey, you should legally inform the Jandarma, when you have people visiting your property. This is why, when anyone arrives at a Turkish Hotel, their passport details are taken and given to the Jandarma/Police.
So we were told to go and "register" with the Muhtarlik which is basically like letting the council/village elders know who is in the area under their control. This is part of the council/belediye and cost us 12 ytl, to have 3 files made up, one for the Muhtarlik, one for the Jandarma, and one for us. This envolved, having 3 sets of photographs taken, our passports copied and our tax numbers copied. Then you take all three files to the Jandarma, which the Captain then signs, he kept a copy and a copy was then returned to the Muhtarlik after it had the Captains signature.
The purpose of these files, is that when any family/friends/guests arrive, they complete a form which will be ready at the apartment, and they have to put their full names, passport numbers and home address. Then my property manager will take a copy for the Muhtarlik and also to the Jandarma.
I also have obtained a translated copy into English of the Mugla general sitesi/complex rules, so that I could confirm that there was not a rule saying I could not have guests at my house. I will get a copy put on the forum, in English, but it will take me quite some time to type it all out. The rules do confirm, that I should inform the authorities/baskan of guests staying at the property.
I also spoke to several emlaks/estate agents who spoke to their solicitors and accountants as to which way I should go, with regards to tax. It has been suggested that I pay "Income Tax" for any rentals in my property. But this means I cannot claim any outgoings I have on the property. Income tax forms have to be completed at the end of January, so I have already paid the accountant 200 ytl and I will be emailing him, my income from the property and he will then submit this to the tax office and I can make payments in two stages, March and July. When I know how much I have to pay, I will let you know.
I have also spoken to the British Consulate in Marmaris, who confirms, that there is no problem about having guests, but I should pass on the information to the authorities.
So all in all, I am completely legal. I had another meeting with the complex Baskan, and he did not shout at me this time, as he now realises, I have done everything correctly and am probably more legal than he is, as he also rents out his property for long term rentals, which makes me wonder? Does he pay income tax on his earnings!
I also had to get a written valuation from my local council for the value of my property, this is needed for the accountant (not quite sure why?) This cost me 15 ytl to have it done and there is one for myself, and one for my husband.
In total, it took me 3 days to get everything sorted out, but this was because no one really knew how to go about things and get everything sorted out. It would only take a few hours to get everything done, knowing what to do, and where to go.
Thanks for detailing the full process you have been through - very helpful. Looks we will have to set aside a couple of days in May to go through the same!!
So have i got it right that even though we pay tax in the UK - you still have to pay in Turkey??
LA
No you only pay tax in one of the two as UK and Turkey have reciprocal agreements. Thus if you pay the tax on Turkish income in Turkey you dont have to pay again in England. Where ever you pay the tax get Vat receipts for all of your expenditure on advertising/property management etc as these are all deductable here in Turkey a vat receipt is a FATURA.
Thanks for the clarification!! Most of my advertsing costs are incurred in the UK - Most of my overheads are in Turkey (cleaning, insurances etc) but i get rental income in Turkey and the UK - In your experience where would be the best place to declare??
LA
PS - My hubby is turkish so no probs with the language barriers and we have someone in Marmaris who deals with everything whilst we are over here
Probably best to declare in Turkey, İf you have used up all your tax allowance in UK, because in the UK the income from renting will be treated as second income and attract higher tax rates whereas in turkey, whilst you dont get a personal tax allowance, the max rate has just dropped to 35% and you have to earn/declare a lot of income to get into that tax band.
nicely put Bryn...declare is the oprative word.... most companies "declare" about 10% of their true income.....crazy but true. could explain why petrol is so expensive
So I am just going to wait and see what happens after the accountant receives my accounts.
I will put in for expenses, but will see if they are allowed. Its all a bit confusing at the moment, as I just have to sit tight and wait to see what happens, and with Bayram on at the moment, no one is working until next week.
So watch this space.
When I asked my agent about paying tax there, I was told that you need a work permit to earn income and so pay tax, the other alternative is to set up a limited company. Both options are not worth the hassle set against the few weeks we actually recieve rental.
I would be really interested to hear from others on this matter and especially if you can set aside associated costs? Last month I paid £750 to have the place painted and this month I have to pay the agents anual management fee, anual site maintenance, anual house and earrthquake insurance, a years Digiturk, repalcement of an aircon unit that broke last year, new emergency lights and to have security gates fitted, is any of this deductable against tax?
Rimms
Rimms in order to deduct it against tax in UK you will need to get proper receipts for it. Ask all the workmen for a fatura which is a VAT receipt. You then have to convince the UK taxman, which should be easier than trying to convince a Turkish taxman though!!!
I was considering renting my turkish property and decided against it but my research into income tax showed that if you are a uk tax payer there is an agreement. I had a chat with a UK inspector and a Turkish bank manager and found several web sites on the matter. However if the income is generated in turkey you must pay the tax there, then you declare it in UK but you take off the tax already paid in turkey. So in effect the tax man in both countries must know about it. You can't just say well I'll pay it in UK and won't bother about it in turkey or the other way round.
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