December 1, 2022

  1. RENTAL INCOME IN TÜRKİYE

Incomes obtained from renting of the property and rights which are stated in the Income Tax Law No.193 is defined as “income from immovable property and rights” and are subject to the income tax in certain conditions.

The liable persons of immovable property’s income are the owners, tenants (persons having the rights to use actually), possessors, servitudes and usufruct right owners of the property and their tenants in the event of leasing of a rented property and rights.

2. PROPERTY AND RIGHTS WHICH ARE SUBJECT TO RENTAL INCOME

Property and rights which are subject to the rental income are defined in Article 70 of the Income Tax Law. They are mentioned as;

  • Land, building, mineral water and underground water sources, mines, stone pits, production places of sand and gravel, brick and tile fields, saltworks and their component parts,
  • Large fishing net fields and fishponds,
  • Component parts of immovable properties leased separately and all their installations, inventory stock and flooring,
  • Rights registered as immovable property,
  • Searching, operating and franchise rights and their licenses, patent right, trademark, commerce title, any kind of technical drawing, design, model, plan and cinema and television films, audiotapes and videotapes, a secret formula belonging to an experience acquired in industry, commerce and science or rights as right of usage or privilege of usage on a production method,
  • Copyrights,
  • Ships and shares of ship and all the motorized shipment and unloading vehicles,
  • Motorized transfer and draw-frame vehicles, any kind of motorized vehicle, machine and installation and their appurtenance.

3. OBTAINING OF RENTAL INCOME

Obtaining of rental income is bound to collection principle. In order to tax the rental income in accordance with the collection principle, it should be collected in cash or in kind.

3.1. Collection of Rental Income in Cash

Collection of rental income in cash states that the payment of rent in Turkish Liras or in foreign currency. Received cheques are also taken into account as collection in cash.

Rental income collected by the taxpayers relating to that year or previous years is taken into account as the income of the year which it is collected in.

Example, if 2018, 2019 and 2020 rental incomes are collected in 2021, these incomes will be taken into account as the income of the year 2021. Rental income relating to prospective years which is collected in advance is not taken into account as the income of the year which it is collected in but as the income of the years which the income is related to.

Example, if 2021, 2022 and 2023 rental incomes are collected in 2021, each year’s rental incomes will be taken into account as the income of the related year.

In terms of renting transactions in foreign currency, gross revenues in rental incomes are determined according to the exchange rate announced by the Central Bank of Republic of Türkiye on the collection date.

3.2. Collection of Rental Income in-kind

If the rental payment is collected in-kind (property, ware etc.), payments are valued according to the Tax Procedure Law No. 213
3.3. Collection and Payment of Leasing by Means of Banks or Postal Administration According to the Income Tax General Communiqué Serial No. 268 and 298 which are published for the authentication with documents issued by banks or postal administrations of the collections and payments that are made in connection with the transactions regarding workplace and residential rentals;

For residence, 500 TL or over per month for each house; in case of weekly, daily or similar short-term housing rental regardless of the
amount for those who obtain a rental income, For workplace, without a limitation of amount for those who lease out their workplaces and their tenants need to make the payments and collection of the leasing by means of banks, financial institutions or postal administrations and are obliged to authenticate their payments and collections through documents issued by these institutions.

Since receipt or monthly statement is issued for the payment and collection while using mediums like depositing money, money order,
cheque or credit cart by means of banks, financial institutions or postal administrations, these documents shall be accepted as certifying documents. Payment and collection carried out via internet banking are also evaluated in the same scope.

The fine which shall be applied to persons who do not comply with the aforesaid obligations is 5% of each transaction’s amount and it should be no lower than the amount of special irregularity fine determined for that year in accordance with the Repeating Article 355 of the Tax Procedure Law.

Source: Revenue Administration of Türkiye
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