Renting out a Turkish property as a US owner: the permit, the Turkish tax, Schedule E and what happens when you sell

Short-term rentals need a permit

Since January 1, 2024, Law 7464 governs renting out a home in Turkey for tourism purposes, meaning stays of up to 100 days. You need a permit from the Ministry of Culture and Tourism before you sign the first rental contract, the permit plaque has to be displayed at the entrance, and platforms must delist homes without one. In an apartment building, every other owner has to agree in writing, unanimously. Renting out more than four times a year without a permit is treated as a commercial activity. The fines are steep: 100,000 lira for the first offence, then 500,000 and 1,000,000 for repeated ones, each with a 15-day period to put things right. We found no 2026 revaluation of those amounts, so treat them as the published figures rather than the current ones.

Long-term rentals of a year or more fall outside the law and need no permit, but a written contract, registration of the tenant's address and a Turkish bank account for the rent are standard. A property manager who handles permits, cleaning and tax filings is the realistic set-up for an owner in the United States.

How Turkey taxes the rent

Rental income from a Turkish property is taxed in Turkey whether or not you live there. Non-residents are taxed on the Turkish income only, at the same progressive scale as residents, 15 to 40 percent in 2026. There is an annual exemption for residential rent; the 2026 figure most sources give is 58,000 lira, but some still quote the older 33,000, so confirm it with a Turkish accountant. You can deduct either actual expenses or a lump sum of 15 percent of the gross rent. The return is filed in March of the following year, by the 25th, and a non-resident owner normally appoints a Turkish tax representative to do it. Short-term lets may also attract the 2 percent accommodation tax and VAT; secondary sources say so, and we have not been able to confirm how consistently that is applied to private owners. Keep every lira of rent flowing through your Turkish bank account; it is your evidence for both tax authorities.

How the IRS taxes the same rent

As a US citizen or resident you are taxed on worldwide income, so the Turkish rent goes on Schedule E of your Form 1040 just like a rental in Florida would, converted to dollars. Expenses are deductible under the same rules: management fees, insurance, repairs, property tax, travel to inspect the property within reason. Depreciation works differently for a foreign building: the IRS requires the alternative depreciation system for property used predominantly outside the United States, which means a 30-year straight line on residential rental property rather than the 27.5 years you may know, and the land share is not depreciable at all. The Turkish income tax you paid on the rent can be taken as a foreign tax credit on Form 1116, which in most cases is better than deducting it. The 1996 US-Turkey tax treaty, in effect since 1998, confirms that Turkey may tax the rent first and the United States gives the credit.

A loss on the Turkish rental is a passive loss and follows the usual passive activity rules. Note that the dollar value of your rent falls as the lira weakens; the lira lost about 18 percent against the dollar in the twelve months to October 2026, so a yield that looks fine in lira may look thinner on Schedule E.

Reporting: FBAR, Form 8938 and FATCA

Foreign real estate you own directly is not reportable on the FBAR or on Form 8938. The bank account that collects the rent is. FinCEN Form 114, the FBAR, is due once the aggregate value of your foreign accounts exceeds USD 10,000 at any point in the year. Form 8938 applies above USD 50,000 at year end or 75,000 at any time for a single filer living in the United States, double that for joint filers, and far higher thresholds for taxpayers living abroad. If you hold the property through a Turkish company rather than in your own name, the company itself becomes a specified foreign financial asset whose value includes the property. Turkish banks report US account holders under the FATCA agreement that has been in force since 2021, so assume the IRS can see the account, and file.

When you sell

Turkey taxes a gain on property sold within five years of purchase as income; after five years the gain is, under the rules as they stood in 2026, exempt for private individuals, and the title deed fee of 4 percent applies again at the transfer. The United States taxes the gain regardless of the holding period as a capital gain, long-term if you held the property for more than a year, with the depreciation you claimed recaptured. The USD 250,000 or 500,000 exclusion for a main home does not apply to a vacation or rental property. Turkish tax paid on the gain is creditable on Form 1116. Because the gain is calculated in dollars, a weaker lira can produce a US gain where there was none in lira, or the reverse; have a CPA model the sale before you set a price.

The numbers that make or break the plan

Gross yield figures from agents rarely include the permit cost, the manager's share, the DASK insurance, the property tax, a vacancy allowance and two tax returns. Run the plan in dollars after all of those, with the rent converted at a conservative rate, and compare the result with what the same money earns at home before you decide that the apartment pays for itself. Our finance guide covers the purchase side, including why a Turkish mortgage rarely belongs in an investor's spreadsheet.

Questions US investors ask

Further reading

• Buying a vacation home in Turkey as a US resident
• Funding a Turkish property with US home equity
• Start a personal mortgage scan