Correct reporting of rental income requires that the way the property is used and the owner’s tax residence be determined together. The difference between a residential lease and a commercial lease is assessed together with the Turkish tax liability of a person living abroad.
Taxation of Rental Income: Exemption, Expense and Return Rules for Residential and Commercial Leases
Calculating tax on rent is not a matter of applying one rate to every amount that reaches the bank account. First the year to which the income belongs, whether a home or business premises is being let, and the nature of the collection are determined. Then the exemption, the filing threshold, the deductible expenses and the offset are each assessed separately. For 2025 rental income declared in 2026, the limits of the income year apply; the same monetary amounts cannot be used for 2026 income.
Legal nature of the practice and how it differs from other obligations
The exemption for rental income, the deduction of expenses and the offset of previously withheld tax are three separate transactions. The exemption, where its conditions are met, removes part of the income from taxation. The deduction of expenses affects the determination of the income. The offset concerns the deduction made from the tax calculated.
The first distinction for rental income: private assets or business assets?
Income from letting a property held as a private asset is, as a rule, income from immovable capital (gayrimenkul sermaye iradı). Income from a property included in a commercial enterprise is assessed as part of commercial income. Services offered in short-term tourist rentals and the organisation of that activity should be examined separately. The fact that the title deed describes the property as housing does not mean that every business model will necessarily be taxed as residential rent.
The collection principle matters for rental income. When rent for past years is collected later, the year of collection counts; for rent paid in advance for future years, the relevant year is taken into account. Where rent is paid in foreign currency, the valuation on the date of collection also belongs in the file. A refundable deposit and rent payment appearing in the same account movement do not make them one and the same income; where the deposit is later set off against rent, that is tracked separately.
Which amounts apply to which transaction in 2025 and 2026?
| Check | 2025 income | 2026 income |
|---|---|---|
| Residential rental income exemption | 47,000 TL | 58,000 TL |
| Filing threshold for commercial rent subject to withholding | 330,000 TL | 400,000 TL |
| Filing threshold for income with neither withholding nor exemption | 18,000 TL | 22,000 TL |
These three amounts do not serve the same function. The residential exemption is removed from the income where its conditions are met. The filing threshold determines the obligation to file; it cannot be concluded that, when the threshold is exceeded, only the excess portion must be declared. A person who owns several homes cannot multiply the exemption for each home. In joint ownership, each co-owner’s share of the income and that co-owner’s own exemption conditions are examined.
Persons who must declare their commercial, agricultural or professional income in an annual return cannot benefit from the residential exemption. In addition, a person whose residential rent exceeds the exemption amount loses the exemption if the gross total of the income items listed in the law exceeds the relevant tariff limit. For 2025 this second check is made against 1,200,000 TL. The exemption decision therefore cannot be made by looking at the rent amount alone. [1; Income Tax Law Articles 21, 70–74, 86]
Actual expenses or flat-rate deduction: how should they be compared?
Under the flat-rate method, where the exemption can be applied, 15% of the amount remaining after the exemption is accepted as expense. Even if the total of documented actual expenses appears higher, the portion of expenses attributable to the exempt income must be treated as non-deductible. A taxpayer who chooses the flat-rate method cannot return to the actual-expense method for two years. For this reason the choice should not be made by looking at the tax of a single year alone.
For 2025 income, the change to loan interest in particular should not be overlooked. The former description of deducting borrowing interest on homes is no longer current after Law No. 7566. The deduction of 5% of the acquisition cost of a home, available for five years from the year of acquisition, is a separate regulation and should not be confused with loan interest. This deduction does not give a general right to carry a loss that exceeds the income over to other income. [1; Income Tax Law Article 74; Law No. 7566]
Hypothetical example comparing the flat-rate and actual-expense methods for rental income
A person who collected 240,000 TL in residential rent in 2025, who meets the conditions for the exemption and has no other deductions, has 193,000 TL remaining after the exemption. The flat-rate deduction is 28,950 TL, and the income after expenses is 164,050 TL. This figure is not the tax payable; it is the income before the deductions of later returns. In a comparison with actual expenses, deducting the expenses for the full 240,000 TL directly from 193,000 TL gives a wrong result.
Commercial rent: withholding and the net contract
It must be determined whether the tenant is obliged to withhold tax and whether the amount in the contract is net or gross. In the filing-threshold check, using only the net amount that reaches the bank account can lead to an incomplete calculation. The withholding relating to the declared income is credited against the tax calculated with the documents. The existence of withholding does not mean that an annual return is unnecessary, however high the income is.
Where residential and commercial income are earned together, the threshold calculation is made by combining the relevant income items in accordance with the law. The absence of the word “rent” in the bank description does not remove the income; equally, not every bank credit can be accepted as rent. The contract, the ownership share, the payment period and the bank record must be read together.
Contract, collection and expense documents to prepare for the return on rental income
The ordinary annual filing period for 2025 income was March 2026, and that period has passed as of today. In a late file, rather than simply preparing a return for the current period, the missing year and the conditions for voluntary disclosure (pişmanlık) or correction are assessed separately. The assessment and payment record relating to the return is kept separately.
The file should contain the lease agreements, the title deed and share information, a statement of collections, expense invoices, the date and cost of acquisition and any withholding records. The obligation to document rent through a bank or PTT is a control area independent of the calculation of income tax.
Frequently asked questions on rental income, expense deductions and taxpayer status
If the home stayed empty, is the annual contract amount still income?
Rent that was not collected and use without consideration lead to different results in terms of market-rent (emsal kira) consequences. Vacancy, receivables and periods of use without consideration must be separated by evidence. For use without consideration, the statutory market-rent exemptions are assessed separately.
Is the amount shown in the pre-filled Ready Declaration (Hazır Beyan) final?
No. The pre-filled information is a starting point for a check. Missing income, shares of ownership, refunds and wrong period entries must be corrected by the taxpayer.
Collection year, advance rent and income for past years
For rental income the collection principle requires bank movements to be matched with the period. Collecting rent for past years later and receiving advance rent for future years are not treated in the same way. The year in which the rent for past years is collected, and the statutory allocation across the years to which advance payments relate, are examined. Stating the full annual contract amount as income of one year without looking at the payment description may create an incorrect tax base.
A deposit is not automatically rent either. A security taken to be returned and an amount later set off against rent owed are different. In the collection list, rent, deposit, expense reimbursement, refunds and transfers between partners should be shown separately. When the entire amount in co-ownership is paid into the account of one co-owner, this does not remove the income shares of the other co-owners.
Market-rent amount and use without consideration by relatives
Where property is let without consideration or at a low rent, the market-rent provision is examined. Where no rent has been set by the competent authority for buildings and land, 5% of the tax value is significant. This rate is not a penalty rate applied automatically to every low rent; proof of the income and the statutory exemptions are assessed together.
Leaving a vacant property without consideration for the protection of the property, or making it available to the owner’s children, parents or siblings for residence, are cases with special provisions set out in the law. The degree of kinship, the purpose of use and the limits on allocating more than one home must be checked. Not every free allocation to a relative falls under the same exemption; in particular, use as business premises must not be confused with residence in a home.
The part of actual expenses attributable to the exempt income, and losses
Where the residential exemption is applied, the part of actual expenses attributable to the exempt income cannot be deducted. For example, if 240,000 TL of residential rent and 60,000 TL of eligible expenses are recorded for 2025, the remaining income after the 47,000 TL exemption is apportioned to total income, and that ratio is applied to the expenses. Deducting the full 60,000 TL and applying the apportionment give different results. The purpose of the apportionment is the ratio; the example assumes that the exemption conditions are met and that all of the expenses are eligible.
Offsetting losses arising from an excess of expenses against other income, and carrying them to later years, are subject to their own limitations. The deduction of 5% of the acquisition cost of a rented home, and the excess amounts arising from the rent expense of the home in which the person lives, are not treated the same as an ordinary maintenance-expense loss. The change to residential loan interest from 2025 income must not be confused with these items either.
If an incomplete return is noticed, which record is corrected?
An omitted rental income, a wrong share of ownership, a duplicate withholding or an incorrect expense are each different corrections. First the relevant income year and the content of the original return are identified; then the correction and, where its conditions are met, the voluntary disclosure route are assessed. The stage at which the tax administration’s finding, the invitation to explain (izaha davet) or an examination is reached may affect which route can be used. The fact that the income appears in the bank records does not transfer the taxpayer’s declaration responsibility to the administration.
Decision to make before acting and the file to prepare
Compare the lease agreement with the bank movements; determine which year’s income you are declaring and whether the property is a home or business premises. Do not choose the expense method only on the basis of that year’s calculation; also calculate the effect of the method on later periods and the part of the expense attributable to the exempt income.
Rental Income of Owners Living Abroad in Türkiye: Tax Liability, Return and Double Taxation
Living abroad does not by itself remove rental income from a property located in Türkiye from taxation. First it is determined whether the person is a full or a limited taxpayer for Türkiye; then the separate rules for residential and business income apply. Citizenship, an address registered in a foreign country and the country where the bank account is held are not sufficient on their own for this assessment.
Legal nature of the practice and how it differs from other obligations
Limited tax liability does not mean that the income a person earns in Türkiye is never taxed. Tax residence is a legal question that is separate from citizenship and from the country where the property is located. The obligation to declare in Türkiye and any offset of tax that may apply in the other country are assessed together.
How does the limited-taxpayer status of a person living abroad affect the taxation of rental income?
The Income Tax Law taxes, in principle, the income that individuals who are not resident in Türkiye earn in Türkiye. In assessing residence, the place of domicile and the length of stay in Türkiye within a calendar year are considered together with the statutory exceptions. Where a double taxation treaty exists, the residence rules in that treaty are also examined. For this reason, the statement “I have a foreign passport” or “I have been abroad for six months” does not by itself resolve the file. [4; Income Tax Law Articles 3–7, 86]
Paying the rent of a flat in Türkiye into a foreign bank account does not move the source of the property income to the foreign country. On the other hand, it cannot be said that a limited taxpayer must include all of their foreign income in an annual return in Türkiye. Taxing power is assessed by income type and the relevant treaty.
Why are residential and withholding-based commercial rents separated?
For 2025 residential rental income, the 47,000 TL exemption applies where its conditions are met; for 2026 income the amount is 58,000 TL. For residential income that is above the exemption, the expense method and other conditions are assessed and an annual return is made accordingly. Having several homes does not create a separate exemption for each. In co-ownership, the income is distributed to the right holders in proportion to their shares and then examined.
For a limited taxpayer, the fact that commercial rent in Türkiye was fully taxed by withholding does not mean that the annual return is not required; this must not be confused with the filing threshold for a full taxpayer on withholding-based rent. Even if the same person files a return because of residential income, the withholding on commercial income that falls outside the return for a limited taxpayer must not be added to the return merely for that reason. The fact that the withholding was actually made and the nature of the income must be confirmed by the file.
| Situation | Priority for review |
|---|---|
| Residential letting in Türkiye | Residential exemption, collection and expenses |
| Commercial income fully subject to withholding | The limited-taxpayer rule on exclusion from the return |
| Commercial income without withholding | The relevant threshold for income without withholding and its filing obligation |
| Property included in a business | Business income assessment instead of rental income |
Rental expenses of the owner living abroad, and the transactions to be carried out in Türkiye through a representative
The choice between the flat-rate and the actual-expense method requires a separate calculation, as it does for owners living in Türkiye. The change applied from 2025 income to loan interest on homes cannot be disregarded here either. It must not be assumed that a limited taxpayer may deduct from the Turkish rental income the rent paid for a home in which they live in a foreign country; the statutory limit on this special expense item is also checked.
A person acting from abroad may use the Ready Declaration (Hazır Beyan) and the Digital Tax Office facilities. Where transactions are carried out through a representative, the scope of the power of attorney and the authority to be used in electronic transactions must be determined. Sharing passwords should be avoided; representation should be arranged in accordance with the procedure. The place where the income is earned and the person’s last address in Türkiye matter in determining the competent tax office.
How is double taxation handled?
Many treaties provide that the state in which the property is located may tax the income from it. The consequence in the country of residence may then arise, under the treaty, by way of exemption or offset. The statement “I paid tax in Türkiye, so I do not need to report it in the other country” is therefore not reliable.
For example, in the file of a person who owns a flat in Türkiye and is a tax resident of another country, three separate records are needed: the gross collections and expense calculation for the Turkish property, the tax assessed and paid in Türkiye, and the application of the treaty in the country of residence. A return filed in Türkiye cannot be accepted as a substitute for a return in the foreign country. This article does not replace the specific provisions of any country’s treaty.
Documents to prepare for residence abroad, rental income and tax payments
In addition to the lease agreement, the title deed share, bank movements and expense documents, a certificate of residence, the dates of stay in Türkiye and any tax records in the foreign country, if any, must be kept. The year for which the certificate of residence was issued is important: a certificate for one year may not explain the actual situation in later years, which may have changed.
Does Turkish citizenship prevent limited taxpayer status?
Not by itself. Residence and the specific provisions of the law are examined. Special situations such as public service are not the same as ordinary residence abroad.
What happens if the rent is collected in foreign currency?
The Turkish lira equivalent of the income is found under the applicable valuation rule. It is not correct to treat the year-end balance of a foreign-currency account as the whole year’s rental income; each collection and the period to which it belongs must be separated.
Certificate of residence and the double taxation file
A certificate of residence obtained from a foreign country may be important for applying the relevant treaty; it is not the same document as a passport or an address record. The period the certificate covers, the competent authority, and the conditions for translation and certification must be checked. A person who changes country during the year must not be subjected to a single annual generalisation for all of their income.
The fact that income from a property in Türkiye can be taxed in Türkiye does not mean that the state of residence must disregard the same income. The rental-income articles of the relevant treaty and the articles on the elimination of double taxation must be read together. The exemption method and the offset method differ; the Turkish tax paid, with its documentation, is the basis of the transaction to be used in the other state.
Gross commercial rent and the net amount paid into the bank
The determination of whether the commercial lease price is net or gross affects the tax calculation. Where the tenant makes a deduction, the gross income and the tax withheld are shown separately by adding the deduction to the net amount paid into the bank. It must be examined whether the tenant is obliged to withhold tax and what amount was actually declared. Not every commercial tenant has the same withholding status.
For a limited taxpayer, the exclusion from declaration applicable to commercial rent taxed by withholding cannot be carried over to residential rent as it stands. Where the same property is partly used as a business and partly as a home, or where the use changes during the year, the contract, the actual use and the payment periods are examined separately.
Filing from Türkiye remotely and representation
Being abroad does not extend the filing deadline. Access to the Ready Declaration, identity verification, the representation authority and the notification details must be checked in advance. Where an agent acts, the scope of the authority, who approved the return and to whom the assessment was delivered are determined.
The file should keep together the land-registry share, the statement of collections, withholding records, expense documents and certificates of residence. Where rent is collected in foreign currency, the Turkish lira figure is calculated under the rules for collection and valuation; treating the foreign account’s year-end balance as rental income is not correct. The payment of tax in a foreign country does not automatically remove the obligation to file in Türkiye.
Decision to make before acting and the file to prepare
First determine your residence status and the double taxation treaty that may apply. Then match the type of rent, the gross income, the tax withheld in Türkiye and the payment document to be used in the foreign country for the same income period.
Sources and legal bases
- Tax Guide for Persons Earning Rental Income (Kira Geliri Elde Eden Mükellefler İçin Vergi Rehberi)
- Income Tax Law No. 193 (Gelir Vergisi Kanunu)
- Law No. 7566
- Rental Income Guide for Persons Not Resident in Türkiye (Dar Mükellefler) (Türkiye'de Yerleşmiş Olmayanlar (Dar Mükellefler) İçin Kira Geliri Rehberi)