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The taxes withheld within the year by the tenant may be It should be taken into account that those who select this
deducted from the income tax calculated, according to the method may not revert to the actual expense method before
income tax tariff over the mentioned amount. 2 years.
On the other hand, we would also like to remind you that 2. Actual expense method
over the rent of the real estate rented as an office to
taxpayers deriving business profits taxed under the simple In the actual expense method, expenses that are listed in the
procedure, income tax withholding is not applied by these article 74 of the Income Tax Law and that must be based on
taxpayers. The declaration limit for such rental incomes that documents are deductible.
are not subject to tax withholding or exemption application However, since TL 5.400 of the revenue is exempt from tax
is TL 2.200. All office rental incomes exceeding this amount in case of residential rental income, the part of the expenses
in 2019 (that are not subject to withholding tax) need to be corresponding only to the taxable gains should be calculated
declared.
and deducted from the income.
C. In cases where office and house rental incomes are Information regarding expenses deductible in the actual
combined expense method is brought to your attention below:
If rent is received both from a residential property and an a. Loan interests
office, first of all, whether the house rent will be declared
should be checked. Accordingly, if the house rents collected If the real estate acquired with a loan is rented, the interests
in 2019 by taxpayers in the scope of the exemption exceed paid for the loan can be deducted from the rent income
TL 5.400, the income exceeding this amount should be derived. As a matter of fact, if the loan interests exceed the
declared. rent income, this amount is deemed as surplus expense,
which means that this part, which cannot be deducted
If the total gross amount of the rental income from office from the rent income, can be deducted from other incomes
that is subjected to withholding and residential rental income declared.
exceeding the exemption exceeds the declaration limit of TL
40.000, the office rental income should also be included in b. 5% of the house purchase price
this declaration. On the other hand, if the total amount is
less than TL 40.000, only residential rental income shall be 5 % of a real estate purchase price as a residence can be
declared and office rental income shall not be included in this deducted as expense for 5 years as of the year of acquisition.
declaration. However, if the expense calculated in this way exceeds
the rent income derived, the exceeding part may not be
In case a tax return is submitted due to rental incomes deducted from other incomes or carried forward to following
exceeding the exemption or declaration limit above, one years.
of the methods of lump-sum or actual expense would be
selected to calculate the net revenue, depending on the c. Rent of houses occupied
income recipient’s preference and tax would be calculated
over this amount according to the income tax tariff. Another actual expense item on the other hand is the rent
paid by those who rent the houses they own and pay rent
When office rental incomes are declared, taxes withheld for another house they live in. The part of these rents
throughout the year by the tenant would be deducted from corresponding to the non-exempt gains can be deducted
the tax calculated on the tax return. from the revenue in accordance with the actual expense
method. However, as explained above, if the expense exceeds
D. Expenses to be deducted from rental income the rent income, the exceeding part may not be deducted
from other incomes or carried forward to following years.
Expenses that may be taken into account in the
determination of the declared rental income can be d. Thermal insulation expenditures
determined using two different methods, which are “lump
sum expense” and “actual expense” methods. Taxpayers may Expenditures intended to ensure thermal insulation and
choose the method they prefer. energy saving which provides a feature of increasing the
real estate’s economical value made by the leaser may
1. Lump-sum expense method be deducted from rental income. On the other hand, in
the circumstance that these expenditures exceed the
In this method, 15% of the rent can be deducted directly as amortization limit (TL 1.200) in a single calendar year,
expense. (This rate was last applied as 25 % in the submission considering them as a cost is also possible.
of rental revenue for 2016 and it was lowered to 15 % to be
applied on the income acquired as of 1 January 2017). e. Other actual expenses
If the income is partly exempt (for example, TL 5.400 of Some other actual expense items that can be taken into
residential rental incomes is exempt from income tax for the account in the declaration of rental income, provided that
year 2019), the exemption should first be deducted from they are related with the real estate rent, are as follows:
the rent amount and the 15% lump-sum expense should be
deducted from the remaining income. ➢• Lighting, heating, water and elevator expenses,
➢• Management expenses,
Since there are no exempt amounts for rents received from
offices, 15% of the rent should be deducted as lump-sum ➢• Taxes, duties, fees and goodwill paid along with insurance
expense and the remaining amount should be declared. expenses,
➢• Depreciation (2%),
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