Page 14 - VEGUSUBAT2019

Vergide Gündem
English Translation

Taxation of the income acquired through
rental revenues and real estate sale in 2019

Taxpayers deriving business profits and independent personal service gains must
file tax returns annually, regardless of whether there is income or not. The same
does not apply to other taxpayers. For example, individuals who rent or sell their
real estate must file tax returns only for the year when rents are collected or the
sale is performed.
In this article, we will discuss the taxation of incomes derived in 2019 from
residential property or offices outside of the scope of commercial activity, under
two main titles (rental income and gains on sales).

I. Taxation of rental incomes

A. Rental income from residential property
TL 5.400 of the rental income derived in 2019 from real estate rented as residence
is exempt from income tax. Tax returns do not have to be filed; in case an income
less than this amount is gained.

However, in cases where a revenue exceeding the exemption limit is gained but not
declared or is declared deficiently, the exemption may not be enjoyed. Furthermore,
those who are obliged to declare their commercial, agricultural or professional
profits with annual tax returns may not benefit from this exemption either.
On the other hand, of those who derive rental income from residential property
exceeding the exemption amount of TL 5.400 in 2019, the total gross amount of
whose incomes (wages, income from securities, income from real estate and other
gains and revenues) exceeds TL 148.000 may not benefit from this exemption
either, regardless of their being subject to declaration or not.

In case taxpayers who are entitled to an exemption gain rental income from
residential property exceeding the exemption amount in 2019, firstly the exemption
amount (TL 5.400) is deducted from the gross revenue, and then the amount which
should be taxed (tax base) is calculated by deducting the expenses (actual or lump-
sum expenses).

The income tax payable is calculated by applying the tax rates shown in the income
tax tariff effective in the year 2019 to this amount.

B. Rental income from offices

In the declaration of rental incomes from offices that are subjected to withholding
tax, there is a “declaration limit” determined separately for each year. This limit is
TL 40.000 for rental incomes from offices derived in 2019.

Accordingly, if the gross amount of the rental incomes derived in 2019 subjected
to withholding tax, is lower than TL 40.000, these incomes do not need to be
declared. However, while benchmarking aforementioned declaration limit of TL
40.000, the total amount of other declarable incomes from marketable securities
should be taken into account in addition to the incomes mentioned above.
In case the gross rental income from the office exceeds the declaration limit, the
whole income should be declared. The expenses would be deducted from the
amount in question using one of the methods of lump-sum expense or actual
expense, depending on the income recipient’s preference in order to reach the tax
14 base.
February 2020