Low Or No Value For Rental Income

“Equivalent rental value” is taken as bases in case of low or no value for rental income. According to this basis, equivalent rental income principle shall be applied on the conditions of;

  • Leaving the immovable property to the usage of other persons for free,
  • Lower value of rental income of rented immovable property than the equivalent rental value. The equivalent rental value in rented buildings and lands is the rental value determined by authorized specific authorities or courts, if it is available.

The equivalent rental value in property and rights for other than buildings or lands is 10% of their cost price. If this cost is not known, it is 10% of determined values of them calculated in accordance with valuation of property provisions of Tax Procedure Law.

Example: Taxpayer (A) gave up a flat valued 400.000 TL to one of his friends without charge in 2018.

Accordingly, although taxpayer does not obtain rental income, he should be supposed to obtain rental income in accordance with the amount reached after the calculation of equivalent rental value.

Equivalent rental value: 400.000 x 5% = 20.000 TL. This amount should be considered as income to be declared.

Equivalent rental value principle is not applied under the following conditions:

  • Leaving empty immovable properties to other person’s residence in order to protect the immovable,
  • Allocating the buildings to the residence of the property owner’s children, mother and father or siblings (But, if more than one house allocated to the residences of each of these persons, equivalent rental value is not calculated only for one of these houses. For example, if owner of property has allocated two houses to the residence of his child, it will not be calculated equivalent rental value for one house and for the second one it will be calculated.)
  • Accommodating of relatives with the property owner in the same house or flat,
  • Leasing done by General Budget and by Annex Budget Offices, by provincial administrations and municipalities and by other public institutions and organizations.

 

 

 

Source: gib.gov.tr
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