All information related to the rental tax in Turkey

The forms of real estate investment in Turkey vary, and there is no doubt that they all achieve significant profits for the investor. Some prefer to rent real estate, some prefer to resell them, and some buy commercial real estate and use it as an office for work or a place to sell products and goods.

Indeed, these investments entail some taxes, including the rental tax in Turkey, as the money obtained by renting property and real estate are sometimes subject to this tax. We will talk about all the details below.

What is the minimum rent that is required to pay the rental tax?
According to Turkish law, real estate owners do not achieve an annual income that exceeds the minimum rent. The Turkish government sets every year the minimum annual rent; for example, in 2016, it was the minimum that is excluded from the rental tax. According to what was approved by the tax department in Turkey, it is 3800 Turkish liras, and anyone who gets a financial income of fewer than 3800 liras in that year is exempt from paying the rental tax.

Are there exceptions to the rental tax in Turkey?
Indeed, there is that. Every year, the tax department in Turkey sets exceptions on imports from renting real estate, and the final tax is determined after subtracting this exception from the original tax value. Still, some points should be paid attention to:

Suppose there are partners in the ownership of the property. In that case, the value of the exception is applied to the incoming made by each partner in the ownership of the property, as it is shared from the incomes of each partner separately.
Persons who gain additional profits in the agricultural, industrial and professional fields do not apply the exception to them.
If the investor owns a group of real estate and leases it, this exception applies to only one of his properties.
If there are heirs to the property, the exception applies to each heir separately.

What happens when the rent is not paid through the bank or the mail?
According to the laws, all those who obtain rental income for the property exceeding 500 liras per month or rent offices for work have to pay and receive money exclusively through bank and mail transfers. In the event of non-compliance with that, a fine of 5% is imposed for each transaction.

What are the cases in which the rental tax is not paid?
- Cases of leasing are made by public and private institutions such as municipalities and governorates.
- Cases in which the property owner places a family in the property without payment.
- When the property owner resides with his relatives on the same property.
- When the property is registered for children, parents, or siblings.

How is the rental tax calculated?
There are two basic methods for calculating the property rental tax value, and they are:

- Actual expenditure method.

- Lump-sum method (fixed).

The property owner has the right to choose the method that suits him, but he cannot change it until after two years, and the same method is applied to all properties.

Fixed charges method for rental tax:
In the beginning, the value of the exception is subtracted from the annual import value

The remainder = annual rental imports - the exception that the tax department specifies.

Subsequently, 25% of the remainder is subtracted, and the tax is applied to 75% of the remainder, according to the tax brackets that are determined annually.

Deduction of rental tax when purchasing the property:
When buying a property in Turkey, 5% of the value of the property subject to rent tax is deducted for a full five years from the date of purchase, for example:

If a property is bought at 300 thousand Turkish liras and leases this property for 60 thousand liras annually, then 5% of this price is deducted, i.e., 300,000 x 5% = 15,000

Thus, the tax is applied to 60,000 - 15,000 = 45,000.

The actual expense method of rental tax:
When choosing this method, all the interest that will result from purchasing this property will be deducted from the bank loan, and to clarify this, we will present an example:

As the annual income for rent was 60 thousand Turkish liras, and the owner used to pay 10 thousand Turkish liras annually as interest to the bank in exchange for the loan that was used to buy this property, then the tax is calculated at 60,000 - 10,000 = 50 thousand Turkish liras.

A large number of donations that are made to different institutions are deducted.