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Rental Property Taxes in Turkey

According to the Turkish Income Tax Law, rent earned on a private property is subject in some cases to income tax.

Minimum Rental Tax On Residential Units

Individuals who have real estate rental imports are exempt from paying rental tax if they do not obtain an annual income that exceeds the minimum (exemption value) determined by the Tax Department each year, and the minimum exempted rental tax for the year 2016 as determined by the Tax Department is 3800 Turkish liras.

Exemptions apply to real estate rental imports

Each year, the Income Department determines the percentage of the value of exempting taxes on rental imports of real estate according to the various exceptions that are applied to real estate rental imports, and these exceptions are subtracted from the annual imports that are obtained from the lease, and the taxes imposed on rental imports are calculated by subtracting the amount of the exception Specified for the year in which the imports were obtained. The exemption amounts according to the years are as follows

Things to know about the right to exceptions regarding real estate rental imports

  • If there is a partnership in the real estate, then the exception applies to the import of each partner in the real estate separately, meaning the specified amount is excluded from the incoming received by each partner.

  • This exception does not include individuals who receive commercial, agricultural, and other professional profits in addition to rental income.

  • If the taxpayer gets a rental inclination for more than one property, the exception applies to only one property import.

  • The exception applies to each heir separately in the case of not sharing the inheritance.

Pay the rent through the bank

Anyone who obtains real estate rental imports over 500 liras per month, and everyone who leases and rents workplaces, is required to pay and receive rents by bank or postal transfers, and if payment and receipt transactions are not carried out through banks and the mail, a fine of 5% on each transaction, provided that this fine is not less than the fine for violations stipulated in Article 355 of the Tax Principles Law.

Deduction of the interest of the loans used to purchase the leased unit from the tax in the method of calculating the real expenses

In the case of choosing the method of calculating the real expenses, the interest (only interest) resulting from the loans used to purchase the leased property is deducted from the tax. 

Also, many donations that are legally donated to public institutions that are subject to public and private budgets, such as health and educational institutions, internal departments, orphanages, children, the elderly, and other religious institutions are dropped.

The amount of the calculated tax is paid in two equal installments in March and July of each year to the tax department to which it is subject, or to other tax departments or to the divisions of banks authorized to collect taxes.

Circumstances where taxes are not paid

  • Allocation of the housing unit by its owner to the children, parents, or siblings, but in the case of allocating to each of them more than one real estate, only one property is exempt from the treatment of proverbial rent value.
  • Rents that are made by public institutions and administrations with private and public budgets, such as private administrations and municipalities, regions, and governorates.
  • Housing others in empty real estate for free to protect them.
  • The residence of the property owner with his relatives in the same property.

Methods used to determine rental income

When calculating rental income tax, the net value of the import that is obtained from the rent is determined in two different ways. Homeowner is free to choose which method applies to them, but they can not change it for two years.

  • Actual (Real) Expense
  • Lump-sum (fixed) expense

Fixed expense method in the rental tax

In the case of choosing the fixed expenses method, after subtracting the exemption value from the annual rent imports, 25% of the total remainder of the mentioned incoming is subtracted as fixed expenses. The calculation of tax in the fixed expenses method shall be as follows:

Annual rental imports - Exception value specified = rest 

Actual Taxable Value x Tax Slide = Tax Amount

The application of the tax bracket and the value of the exception varies according to the income of the individual taxpayers.

Expenses that are deducted from the tax in the computation of the real expenses method

  • Expenses of lighting, heating, water, and services for the rental housing unit.
  • Management expenses of the leased housing unit.
  • Insurance expenses of the rental unit.
  • The consumption value of the rental housing unit.
  • Taxes and fees related to the rental housing unit.
  • Expenses Benefits related to the rental housing unit.

Deduction of the acquisition cost from the tax in the true expenses method

In the case of choosing the method of calculating the real expenses, 5% of the real estate acquisition value will be deducted from the rental income tax, for 5 years from the date of acquisition, and this applies to one property only.

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