Turkey’s New Tax Package to Double Landlords’ Tax Burden

A new tax package submitted to the Turkish Grand National Assembly (TBMM) by ruling AK Party lawmakers is set to dramatically reshape the taxation of rental income in Türkiye. According to the Treasury and Finance Ministry’s impact analysis, removing the current ₺47,000 annual rental income exemption will double the taxes landlords pay to the government.

Landlords to Pay at Least Two Months’ Rent in Taxes

The ministry’s technical findings reveal that, starting in 2027, every property owner who earns rental income will have to pay taxes equivalent to at least two months of rent each year. Until now, most homeowners have paid around one month’s rent as income tax, thanks to the exemption threshold.

Once the exemption is lifted, the ministry projects a significant rise in tax liabilities. The new rule means landlords will shoulder nearly twice the financial burden they currently face — a move that could particularly strain middle- and low-income property owners.

According to figures cited by Sözcü, in 2024, approximately 1.98 million landlords declared rental income and benefited from the exemption. Of these, about 500,000 were retirees or individuals receiving widow’s or orphan’s pensions, indicating that a large share of the affected taxpayers live on fixed or modest incomes.

₺22 Billion in Additional Taxes Expected

The Finance Ministry estimates that 1.5 million landlords will lose access to the exemption entirely once the new system takes effect. These taxpayers will collectively pay an additional ₺22 billion in taxes in 2027, compared to what they would have owed under the current system.

On average, this means each affected landlord will pay roughly ₺15,000 more — an amount equivalent to about one month’s rent. The government argues that this adjustment will broaden the tax base, ensuring more equitable revenue collection at a time when Türkiye is seeking to curb budget deficits and inflationary pressures.

The proposal specifies one key exception: the rental income tax exemption will remain in place only for retirees, widows, and orphans who also receive pension payments.

Unemployed and Low-Income Landlords Excluded

However, the draft law excludes unemployed individuals, those receiving unemployment benefits, and citizens who rely solely on rental income for their livelihood from the exemption list. This exclusion has drawn sharp criticism from opposition parties and tax experts, who argue that the reform disproportionately targets small-scale landlords while leaving loopholes for wealthier individuals.

Critics point out that affluent retirees who own multiple properties will continue to benefit from the exemption as long as they collect pension payments — a detail seen as favoring Türkiye’s upper-income groups. “The design of this exemption rewards wealth and punishes necessity,” one economist noted, warning that the rule could widen inequality between high-asset pensioners and ordinary landlords struggling with rising living costs.

Pushback Expected in Parliament

The proposal is currently under review in parliamentary commission hearings, where opposition members are expected to propose amendments aimed at correcting what they call “regressive and unfair provisions.” Lawmakers are expected to debate whether the exemption should instead be based on total income or property ownership size, rather than employment or retirement status.

Analysts say the government’s broader goal is to increase tax revenue amid slowing economic growth, rising public debt, and continued efforts to fund large-scale social and infrastructure programs. Yet, the decision comes at a politically sensitive time, as households face mounting inflation and a housing crisis that has already strained renters and owners alike.

If approved, the reform would mark one of the most significant shifts in Türkiye’s property taxation system in decades — one likely to reshape both landlord behavior and the broader real estate market.