Ali Deniz İnan
Serbest Muhasebeci Mali Müşavir
Bilim Uzmanı
denizinanmuhasebe@gmail.com

Real Property Income For Non-Resıdent Taxpayers

Declaration of income tax return has started earning income from rental of real estate at the beginning of March 2019. People who had revenue from rental residence and/or office (workplace) (except is applied withholding tax for office (workplace) ) in 2018, they have to declare tax return for this gain until 25 March 2019.

  İf non-resident people who have residence or office in Turkey and also earn income for their rental real estate, they have to declare their tax return about annual earning from revenue of their rental real estate.  

As a consequence of this reason, non-resindent taxpayers who have earned income from rental of their real estate in Turkey in 2018, have to declare their annual earning with income tax returns until 25 March 2019.

Collection Must Have Done For Declare

İf the rental income of current year and previous years are collected as cash by taxpayers in current year, all rental income (current year and previous years) will have to be declared together.

For example;  if the rental income of 2017 is collected in 2018, the rental incomes of 2017 and 2018 will be declared together and the rental income of 2017 will be regarded as the income of rental income of 2018.

Long term deferred rental income is collected by taxpayers with current year, the rental income will be regarded as the rental income of each related year and it will be declared in related year.

For instance; if the rental income of 2019 is collected in 2018, the rental income of 2019 will be declared in related year.

Exception Amount Of Rental Income For 2018

The amount is determinated by Finance Ministry for rental income providing that from rent estate as a residence (house, flat) is excempted from income tax in a calender year. The exception amount is 4.400-TL for 2018. 

  İf non-resident taxpayers;

• Have commercial, agricultural or professional earnings in Turkey,
• Do not declare or underdeclare their tax return despite their rental income over than exception amount,

do not benefit from tax exception.

Taxpayers who have rental income from office (workplace), do not benefit from tax exception. Only rental income is obtained from residence can benefit from this tax exception.

İf rental income involve more than one residence, the exception amount will not be implemented separately to every residences. İt will be applied only once all the total rental incomes. İf there is more than one owner of residence, the exception amount (4.400-TL) will be implemented individual for each owner.

Two Types Of Deductible Expenditures Methods For Rental Income 

There are two different deductible expense methods which are “Lump-Sum Expenditures” and  “Actual Expenditures” that can be deducted from rental income for determined net income. Taxpayers have to choose just one from these two deductible expense methods.

Lump-Sum Expenditures Methods

%15 of rental income can be deducted directly as expenditure from total rental income. İf taxpayers who prefer this method, they can not give up for 2 years.

Actual Expenditures Methods

İf taxpayers prefer this method, they can deduct expenditures that written below from rental income;

• Lighting, heating, water and elevator expenditures that has been paid by owner for their rented real estate,
• Management expenses of rental real estates providing that measured important of real estate,
• Insurance charges of rental real estate
• Loan interest of rental real estate
• % 5 of real estate purchase price can be deducted from rental income for 5 years from date of acquisition of real estate
• Real property tax, duty, fee and special assement can be deducted from reantal income providing that it is paid by lessor.
• Amortization of real estate,
• Repair expenses of rental real estate providing that it is made by lessor
• Repair and maintenance expense of of rental real estate providing that it is maken by lessor
• Taxpayers who rent a house for living that can be deducted that rent expense from their rental income
• Expense of damages paid for rental real estates in relation to contract, law or sentence

Income Tax Rates

İf the income is gained by taxpayers at 2018, income tax rates will be calculated according to the schedule below

Tax Schedule of 2018	Tax Rate
Up to amount of 14.800 TL	% 15
2.200 TL for 14.800 TL of 34.000 TL, over	% 20
6.060 TL for 34.000 TL of 80.000 TL, over	% 27
18.480 TL for 80.000 TL of 80.000 TL, over	% 35

Example-1; Taxpayer who is living in Germany, he rented his flat in İstanbul in 2018. He gained 10.000 € (Euro) from this leased real property. Also he rented his office (workplace) in İstanbul in 2018, he gained 20.000 € (Euro) from this leased office. He preferred lump-sum expenditures methods for rental income and he has not income in Turkey without rental income.

 On the date of collection, buying rate for € (Euro) by the Central Bank of Republic of Turkey is assumed as 6,00-TL (this rate is assumed, the amount of rate determine according to date of collection of rental income)

İf the rental income of office is subjected to withholding tax in Turkey, the annual tax return will not be declared regardless the amount providing that only rental income is gained from office (workplace)

İt is withheld 24.000 TL tax from rental income for his office (workplace), therefore rental income of office (workplace) will not be declared.   

İncome tax for rental income of taxpayer who is living in Germany is calculated as written below;

Total Gross Revenue (10.000 x 6,00 TL)	60.000,00
Amount of Exception	4.400,00
Balance (60.000,00 – 4.400,00)	55.600,00
Lump-Sum Expenditures (55.600,00 x % 15)	8.340,00
Taxable İncome (55.600,00 – 8.340,00)	47.260,00
The Calculated income tax (6.060 TL for 34.000 TL, balance amount for % 27) (47.260 – 34.000 = 13.260), (13.260 x % 27= 3.580,20), (6.060 + 3.580,20 = 9.640,20)	9.640,20
The income tax payable	9.640,20

Declaration And Payment Time Of Rental Income

People who had revenue from rental residence and/or office (workplace) (except is applied withholding tax for office (workplace) ) in 2018, they have to declare income tax return for this gain or these gains until 25 March 2019.

The calculated income tax must be paid two equal installments until end of March and July in 2019 by taxpayers.

12.03.2019

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