Rental Taxes and Costs in Turkey

Rental Income
Net rental income is taxed as ordinary taxable income. However, if the net rental income from property let out as a residence does not exceed YTL2,200 (€1,095), the said income is not subject to declaration. The net rental income is not liable to VAT.

Net rental income can be determined either through the actual deduction method or lump sum method. Actual deduction method deducts real expenses (inc. lighting, heating, water expenses; administrative expenses, insurance expenditures; tax and duties; interest expenses; depreciation costs and repair expenditures) from the gross rental income. 5% of the acquisition cost is also deductible within five years for income arising from the lease of buildings.

On the other hand, lump sum method allows taxpayers to deduct 25% of their gross income to arrive at the taxable income. Once the taxpayer has chosen to use the lump sum method, he may not revert to the deduction of actual expense until after two years.

Income tax rates for 2006 progress from 15% to 35%.