Wondered if this information would be helpful to anyone
BERK ÇEKTİR
b.cektir@todayszaman.com Columnists
New rent collection requirement
Last week, I wrote about property-related taxes, but I did not cover rental income tax. Today I will give some basic information on rental income tax and focus on the Ministry of Finance's new regulation on rental income. If a landlord rents out his home and earns rental income of more than YTL 2,400 per year, then the income of the landlord is subject to rental income tax. However, 25 percent of the remainder, after deducting YTL 2,400 from the yearly rental income, may be deducted from taxable rental income for maintenance expenses, if any. This rule applies to residential properties that are rented to individuals. If the property is rented for commercial purposes, then the income is subject to rental income tax regardless of the amount.
Therefore, if you earn rental income, you are required to declare your annual rental income to the tax office. Online services are available for making this declaration.
Details of new regulation
A new regulation was issued on July 29 which states that, beginning on Nov. 1, 2008, it is a statutory obligation to collect rental income through a bank or postal transaction. The purpose of this declaration is to prevent undeclared rental income. The regulation covers the following situations:
· If you rent out a residential building and your monthly rental income is YTL 500 or more.
· If you rent out a commercial property, regardless of the amount of rental income you receive.
· If you are a tenant of a commercial property, regardless of the amount that you pay.
Detailed transaction statements printed by banks and postal offices are enough to substantiate the payments. Documents detailing payment amounts that are printed from banks' Web sites are also acceptable.
Application of new regulation
If you fall within the scope of the regulation mentioned above, beginning from Nov. 1, you must collect the payments from residential or commercial properties that you rent through a bank or postal office.
As for tenants, try to pay the rent through the banking system as this will assist you in your record keeping and help government agencies in tax collection.
There is no requirement under the new regulation for the bank statements or postal statements to be submitted to tax offices. However, if a property is the subject of an investigation regarding rental income and it turns out that the legal obligation has not been fulfilled, the landlord will have to pay the fine mentioned below.
Consequences for violating rental income regulation
If an individual violates the new regulation on rental income, he will receive a fine of 5 percent of the amount of the rental payment. However, the minimum fine is YTL 320, and the fines will vary between YTL 320 and YTL 1,490 based on the person's profession. Let me give an example to further explain the rental income declaration and application of the new rule. If Mr. Landlord receives YTL 7,400 of rent annually from his tenant, Ms. Taylor, Mr. Landlord will first deduct YTL 2,400 from his annual rental income, which leaves YTL 5,000, and then deduct 25 percent from YTL 5,000, which leaves YTL 3,750 subject to rental income tax.
If Mr. Landlord collects one rental payment directly from the tenant, instead of through a bank or postal office transaction, Mr. Landlord, if he is caught, will pay a YTL 320 fine. If Mr. Landlord collects rent directly for a full year, he will have to pay YTL 3,840 in fines.
NOTE: Berk Çektir is a licensed attorney at law and available to answer questions on the legal aspects of living in Turkey. Send enquiries to
b.cektir@todayszaman.com. The names of the readers are disclosed only upon written approval of the sender.
DISCLAIMER: The information provided here is intended to give basic legal information. You should get legal assistance from a licensed attorney at law while conducting legal transactions and not just rely on the information in this corner.
13.08.2008
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