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In case the gross rental income from the office exceeds the If the income is partly exempt (for example, TL 9,500 of
declaration limit, the whole income should be declared. The residential rental incomes is exempt from income tax for the
expenses would be deducted from the amount in question year 2022), the exemption should first be deducted from
using one of the methods of lump-sum expense or actual the rent amount and the 15% lump-sum expense should be
expense, depending on the income recipient’s preference in deducted from the remaining income.
order to reach the tax base.
Since there are no exempt amounts for rents received from
The taxes withheld within the year by the tenant may be offices, 15% of the rent should be deducted as lump-sum
deducted from the income tax calculated, according to the expense and the remaining amount should be declared.
income tax tariff over the mentioned amount. The rate of
withholding in question is 20% and it is made during the It should be taken into account that those who select this
payment of rental fee in cash or on account (including method may not revert to the actual expense method before
advance payments). 2 years.

On the other hand, we would also like to remind you that over 2. Actual expense method
the rent of the real estate rented as an office to taxpayers
deriving business profits taxed under the simple procedure, In the actual expense method, expenses that are listed in the
income tax withholding is not applied by these taxpayers. The article 74 of the Income Tax Law and that must be based on
declaration limit for such rental incomes that are not subject documents are deductible.
to tax withholding or exemption application is TL 3,800. All However, since TL 9,500 of the revenue is exempt from tax
office rental incomes exceeding this amount in 2022 (that are in case of residential rental income, the part of the expenses
not subject to withholding tax) need to be declared.
corresponding only to the taxable gains should be calculated
C. In cases where office and house rental incomes are and deducted from the income.
combined
Information regarding expenses deductible in the actual
If rent is received both from a residential property and an expense method is brought to your attention below:
office, first of all, whether the house rent will be declared a. Loan interests
should be checked. Accordingly, if the house rents collected
in 2022 by taxpayers in the scope of the exemption exceed If the real estate acquired with a loan is rented, the interests
TL 9,500, the income exceeding this amount should be paid for the loan can be deducted from the rent income
declared. derived. As a matter of fact, if the loan interests exceed the
rent income, this amount is deemed as surplus expense,
If the total gross amount of the rental income from office which means that this part, which cannot be deducted
that is subjected to withholding and residential rental income from the rent income, can be deducted from other incomes
exceeding the exemption exceeds the declaration limit of TL declared.
70,000, the office rental income should also be included in
this declaration. On the other hand, if the total amount is b. 5% of the house purchase price
less than TL 70,000, only residential rental income shall be
declared and office rental income shall not be included in this 5% of a real estate purchase price as a residence can be
declaration. deducted as expense for 5 years as of the year of acquisition.
However, if the expense calculated in this way exceeds the
In case a tax return is submitted due to rental incomes rent income derived, the exceeding part may not be deducted
exceeding the exemption or declaration limit above, one from other incomes or carried forward to following 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 from
the tax calculated on the tax return. the revenue in accordance with the actual expense method.
However, as explained above, if the expense exceeds the rent
D. Expenses to be deducted from rental income 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 determined using two d. Thermal insulation expenditures
different methods, which are “lump sum expense” and “actual
expense” methods. Taxpayers may choose the method they Expenditures intended to ensure thermal insulation and
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 2,000) in a single calendar year,
expense.
considering them as a cost is also possible.
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