In the taxation of rental income, the net amount of the income obtained is determined in two different ways as follows:

• Actual expenses method,
• Lump-sum expenses method (for other than those who lease out rights).

The selection of the actual expenses or the lump-sum method must cover all immovable property, which means that it is not possible to choose the actual expenses method for some part and the lump-sum expenses method for the remaining part.

Taxpayers opting for the lump-sum expenses method cannot return to the actual expenses method unless two years have passed.

Deduction of Expenses in Actual Expenses Method

In case the actual expense method is chosen, the following expenses stated in Article 74 of the Income Tax Law can be deducted from the gross income in order to find the net income.

• Lighting, heating, water and elevator expenses paid by lessor for rented property,
• Management costs which are measured according to the importance of property and related with the administration of the rented property,
• Insurance expenses relating to the rented property and rights,
• Interest of debts relating to the rented property and rights,
• 5% of acquisition value of one rented house for 5 years beginning from the date of acquisition (This deduction applies only to rental income of the rented house; non- deductible part is not evaluated as expenditure surplus. This deduction is not valid for houses acquired before 2018),
• Taxes, duties and fees paid for the rented property and rights and rates paid to municipalities for expenses by lessor,
• Depreciation setting aside for rented property and rights, and heat insulation and energy saving expenditures which are made by the lessor and that increase the economic value of the real estate. (These expenditures can be considered as cost if it exceeds 2.000 TL for the year 2022.)
• Repair and maintenance expenses incurred by lessor for the rented property,
• Rents and other actual expenses paid by sub-lessors,
• Rent of the house accommodated by the lessors who rent their own property, (non-deductible part is not evaluated as expenditure surplus),

It is not allowed for taxpayers not residing in Türkiye, (including Turkish nationals who reside abroad for a continuous period of more than six months with a residence or work permit) to deduct the amount of rents they pay in a foreign country from their rental income obtained in Türkiye.

• Cost of loss, detriments and compensations paid for rented property and rights based on a contract, law or court decree. Non-residents who have opted for the actual expenditure method should keep the documents showing the expenses incurred for a period of 5 years and submit to the tax office when required.

Calculation of Deductible Expenses in Case of Exception in Actual Expenses Method

In case, a taxpayer chooses the actual expenses method and benefits from the exception applied to rental income from house, the part of actual expenses corresponding to the exception shall not be deducted from gross revenues.

The part of deductible expenses corresponding to the taxable revenue will be calculated using the following formula:

(*) Taxable Revenue = Total Revenue – Amount of Exception for Rental Income from House

Example: Taxpayer (D) rented his/her house in 2022 and obtained 120.000 TL of rental income. Taxpayer, who has no any other income, incurred 30.000 TL of expenditure for his/her property and chooses the actual expenses method.

The amount that taxpayer can deduct as actual expenses will be the amount that corresponds to the taxable revenue of the total expense for 30.000 TL.

Taxable revenue = 20.000 – 9.500 = 110.500 TL
Deductible expense = (30.000 X 110.500) / 120.000 = 27.625 TL

In case, the amount of actual expense to be deducted from the rental income is 27.625 TL.

Deduction of Expenses in Lump-sum Expenses Method

Taxpayers opting for the lump-sum expenses method can deduct the lump-sum expense at the rate of 15% from their revenue against actual expenses. The lump sum expense, for taxpayers who obtain a rental income and who will be able to benefit from the residence exemption, will be calculated over the remaining amount after deducting the exception amount.

It is not possible to opt for lump-sum expenses method in the case of renting rights. Taxpayers who earn income from the rental of rights along with the rental income of the workplace must choose the actual expense method in their income tax returns.

Source: Revenue Administration
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

Calculation of deductible expenses in case of exception in actual expenses method

Where a taxpayer chooses the actual expenses method and benefits from the exception applied to rental income from house, the amount of actual expenses corresponding to exception is not deductible from gross revenue.

The deductible amount is calculated as follows:

Deductible expenses = Total Expenses x Taxable Revenue*

Total Revenue

(*) Taxable Revenue = Total Revenue – Exception for Rental Income from House

Example: Taxpayer (C) rented her house in 2019 and obtained 44.000 TL of rental income. Taxpayer, who has no any other income, incurred 10.000 TL of expenditure for his property and chooses the actual expenses method.

The amount that taxpayer can deduct as actual expenses will be the amount that corresponds to the taxable revenue of the total expense for 10.000 TL.

Taxable Revenue = 44.000 – 5.400= 38.600 TL

Deductible expense= (10.000 x 38.600) / 44.000= 8.772,72 TL

Deduction of Expenses in the Lump Sum Expenses Method

Taxpayers who have opted for the lump sum method can after deducting the amount of exception from their rental income, set off the lump sum expenses at 15% of the remaining amount against actual expenses.

It is not possible to opt for lump sum expenses method in the case of leasing rights. For instance, taxpayers, who gain office rental income and income from leasing rights, should choose actual expenses method since they should declare rental income from leasing rights at their tax return.

Taxpayers who have opted for the lump sum method can deduct as a Lump sum expenses at 15% of their revenue .Lump sum expenses rate is determined at 15% of the revenue to be applied to rental income from 1/1/2017.

Source: Revenue Administration – Guidebook on Rental Income for Non-Resident Taxpayers
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

With the authority of regarding legislation article number 28, the decision of the Council of Ministers, vat is detected on some properties and services %18 vat is included to the uniform tax.

For the tax included %8 discounts, %8 vat is included as well.

“For the tax included % 1 discount, %1 vat is excluded” announced.

As mentioned above,  the ones who retail, with the others who amortized service, in the documents of list, invoice, receipt and the other similar documents,  are supposed to detect and show the amount including vat amount.

Tax cost multiples tax rate dividing 100 plus tax amount.
Apart from tax, including vat to be declared, multiples tax rate dividing 100 formulization is used for the calculations.

EXEMPLUM OF VAT CALCULATION
Exemplum 1: Including tax price, a commodity which costs 11.800 Lira, liable to %18 vat, the vat price for that commodity would be as follows,
11.800multiples 18 dividing 100 plus 18 is equivalent to 1.800 Lira

Exemplum 2: Including tax price, a commodity which costs 100.000 Lira, liable to %8 vat, the vat price for that commodity would be as follows,
100.000 multiples 8 dividing 100 is equivalent to 8.000 Lira.

Source:3065-VAT LAW and IMPLEMENTATION General Communique (26.04.2014)

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

1- What is self-employed invoice?

Self-employed invoice is that self-employed is supposed to issue two copy of self-employed invoice regrading all the operations related to the profession and to give one copy of it to the customer and the other to himself.

2- Who issues self-employed invoice?

Tax Professional, sworn financial advisor, doctor, lawyer, architect and consultants, in a nutshell, the taxpayers who are responsible for tax because of their vocational information, is supposed to issue invoice.

3– What are the amounts in self-employed invoice?

It has to cover gross salary, income tax deductions, net salary and vat and net amount to be paid.

4- How self-employed invoice is calculated?

Tax Professional, sworn financial advisor, doctor, lawyer, architect and consultants will issue the invoice as follows:

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

For example;  If someone is working between the hours of 08:00-20:00 and resting for 1,5 hours total, their daily working time is not 12 hours but 10,5 hours.

Source: Labor Law

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.