How to calculate rental income tax in Turket, 2024
Rental income tax is a tax levied on the income received by property owners in Turkey. This tax is calculated in accordance with the Income Tax Law and must be declared. The process of calculating rental income tax consists of several steps, each of which must be carefully followed. Here are the main steps for calculating rental income tax:
Determining Rental Income
The first step in calculating rental income tax is determining the annual rental income. Property owners must identify the total rental income received during the calendar year. Rental income is divided into two categories:
Residential Rental Income: This category includes income from renting residential properties.
Commercial Rental Income: This category includes income from renting commercial properties. Commercial rental income is taxed based on gross income with withholding tax applied at the source.
Deduction of Tax-Exempt Amount
Each year, a tax-exempt amount is set, which is deducted from residential rental income in accordance with the Income Tax Law. This amount can change annually, so it is necessary to check the current amount before declaring income.
For example, the tax-exempt amount for residential rental income in 2024 is 33,000 TL. If your annual residential rental income is less than this amount, no tax is payable. However, if the income exceeds this amount, tax is calculated only on the excess amount.
Deduction of Expenses
Expenses that can be deducted from rental income can be calculated using two methods: the actual expense method and the standard deduction method.
Actual Expense Method: Under this method, expenses related to the property, such as repair and maintenance costs, insurance premiums, depreciation, and loan interest, are deducted from rental income.
Standard Deduction Method: Under this method, 15% of rental income is automatically deducted as expenses. Taxpayers choosing this method are not required to provide supporting documents.
Calculation of Taxable Income
After deducting the tax-exempt amount and expenses, the remaining amount is considered taxable rental income, which is then subject to tax.
Calculation of Tax Using Tax Brackets
Taxable rental income is calculated using a progressive tax scale, which is updated annually. For 2024, the tax rates are as follows:
Up to 110,000 TL: 15%
From 110,000 TL to 230,000 TL: 20%
From 230,000 TL to 580,000 TL: 27%
From 580,000 TL to 3,000,000 TL: 35%
Over 3,000,000 TL: 40%
Filing the Declaration and Paying the Tax
Taxpayers receiving rental income are required to file a declaration of the previous year’s income. The declaration is submitted from March 1 to March 31. It can be submitted online through the Revenue Administration’s website or at tax offices. The tax can be paid in two installments: the first in March and the second in July.
Calculation Example
Suppose in 2024, a taxpayer received an annual residential rental income of 250,000 TL. The tax calculation would be as follows:
Annual rental income: 250,000 TL
Tax-exempt amount (for 2024): 33,000 TL
Income after tax-exempt deduction: 250,000 TL - 33,000 TL = 217,000 TL
Standard deduction (15%): 217,000 TL x 15% = 32,550 TL
Taxable income: 217,000 TL - 32,550 TL = 184,450 TL
The tax calculation on this amount would be:
On the first 110,000 TL: 110,000 TL x 15% = 16,500 TL
On the remaining 74,450 TL: 74,450 TL x 20% = 14,890 TL
Total tax: 14,890 TL + 16,500 TL = 31,390 TL
Adding the stamp duty of 467.20 TL
Total payment amount: 31,390 TL + 467.20 TL = 31,857.20 TL
Thus, the taxpayer must pay 31,857.20 TL in rental income tax.
Correct and complete calculation of rental income tax is crucial for the timely and accurate fulfillment of tax obligations. Annually changing tax rates and tax-exempt amounts require careful monitoring of current information.
