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Examples Related To Rental Income Declaration- Lump Sum Expenses Method

MuhasebeNews — Fri, 29 Mar 2019 13:30:57 +0000

Example: Taxpayer (A), living in Germany, leased out his flat in Ankara and obtained 15.000 € as rental income in 2018. He preferred the lumpsum expenses method and he has no other income to declare in Turkey. On the date of collection, buying rate for Euro announced by The Central Bank of Republic of Turkey is assumed as 6 TL.

Income tax for rental income of taxpayer is calculated as follows:

Total Gross Revenue (15.000 € x 6 TL)	90.000 TL
Amount of exception	4.400 TL
Balance (90.000-4.400)	85.600 TL
Lump-sum Expenses	(85.600 x 15%) 12.840 TL
Taxable Income	(85.600 – 12.480) 72.760 TL
Amount of income tax calculated	16.525,20 TL
Amount of income tax payable	16.525,20 TL
Stamp duty	72,70 TL

Source: GİB
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.

What Are The Expenses To Be Deducted When Determining The Rental Income? -Lump Sum Expenses Method

MuhasebeNews — Tue, 19 Mar 2019 08:00:06 +0000

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 rights)

The selection of the actual expenses or lump sum method should 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.

Deduction of Expenses in the Lump Sum Expenses Method

If the actual expenses method is chosen, following actual expenses can be deducted from the gross amount of rental 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 2014), Deduction of 5% of the acquisition value applies only to one real property rented as house.
For real properties rented as workplace, such expense deduction is not applicable.
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 1000 TL for the year 2018.)
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 Turkey, (including Turkish nationals who reside abroad more than a continuous period of six months with residence or work permit) to deduct the amount of rents they pay in a foreign country from their rental income obtained in Turkey.
Cost of loss, detriments and compensations paid for rented property and rights based on a contract, law or court decree.

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 Value

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

Example: Taxpayer (C) rented her house in 2018 and obtained 38.000 TL of rental income. Taxpayer, who has no any other income, incurred 9.500 TL of expenditure for his property and choses 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 9.500 TL.

Source: gib.gov.tr
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.

How can we benefit from lump sum discount for our clean expenses of construction works abroad?

MuhasebeNews — Fri, 11 Jan 2019 12:00:38 +0000

Our company is doing construction and repair works through a domestic company. We have various clean expenses of our construction work abroad. Is it possible to make a discount on these expenses?
If so, at what rate and how can we write expenses?

Deductible Expenses – Income Tax Law Article 40

It is accepted that the expenses below are deducted so as to determine the net profit.

1.General expenses that are made to earn and maintain business income;

(taxpayers who perform export and construction, repair, installation, transportation jobs abroad may, in addition to the expenses referred in this paragraph and providing that they do not exceed one fifth of the income made in dollars from these jobs, deduct the expenses they calculated as lump sum in return to their expenses related to the jobs above.

Source: İSMMMO
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.