Rental Income Tax and Filing

Under the Income Tax Law, the income you earn from renting out your home is income from immovable property (gayrimenkul sermaye iradı). There's an annual exemption amount for residential rental income; income above that amount is declared in an annual tax return.

Who files a return?

• People whose annual residential rental income exceeds the exemption amount,
• People with workplace rental income that has a portion not taxed through withholding (stopaj),
• People whose combined income with other sources creates a filing obligation.

Expense methods

The taxable amount is found by deducting expenses from rental income. There are two methods:

• Lump-sum expense method: A set percentage of the rental income (fixed by law) is treated as an expense; no documentation is required.
• Actual expense method: Documented expenses such as repairs, insurance, management costs, depreciation, and, under certain conditions, mortgage interest, are deducted.

Once you choose the lump-sum expense method, you cannot switch to the actual expense method for two years. The conditions for the exemption and the lump-sum method have changed in recent years, so check the current rules before choosing.

Filing and payment

The return is filed in March of the year following the year the income was earned. The calculated tax can be paid in two installments (March and July). The Revenue Administration offers a pre-filled return system that makes this easier for rental income.

Consequences of not declaring it

When rent payments are made through a bank and cross-matched against title deed, municipal, and utility subscription records, undeclared rental income can be identified by the authorities. In that case, tax, late payment interest, and a tax loss penalty can all apply.