Get prepared to file your taxes

As mentioned in previous articles, foreigners residing in Turkey are also obliged to pay taxes on income earned through renting out property. All income gained by rental of goods or property (land, buildings, motor vehicles, etc.) cited in Article 70 of the Law on Income Tax is defined as "rental income" and is subject to income tax.

Foreigners only earning an income through renting out property and with no other income-generating business activities must declare the income earned through renting out property to the tax office.

How to declare tax income:

The process is very simple. Register with a tax office and fill out an appropriate tax declaration form. Some tax offices allow you to complete everything over the Internet.

Another option is to provide a professional with a power of attorney so that s/he may take care of all necessary procedures on your behalf. If you choose this path, please read over my articles about issuing and revoking a power of attorney as they contain useful information.

What is the tax filing deadline?

The filing must be made between March 1-15 of every year, meaning you have more than four months left before the deadline.

What if I miss the deadline?

You still have a chance to correct the problem and avoid being prosecuted for filing your taxes late.

If I file late, what do I do?

You must make a statement to the tax office citing the reasons for your late declaration. However, contact a professional for late tax filings, which require that a different procedure be followed.

Be careful and receive your monthly rental income through a bank.

I have already written an article about a new communiqué that came into force to curb undeclared rental income.

A new communiqué was issued on Sept. 29, 2008. Beginning on Nov. 1, 2008, it is a statutory obligation to receive rental income through a money transfer via a bank or the post office. The purpose of this declaration is to avoid undeclared rental income.

If a landlord rents out his home and earns a rental income of more than YTL 2,400 per year, then the landlord's income is subject to rental income tax. However, after subtracting YTL 2,400 from yearly income, 25 percent of the remainder may be deducted from taxable rental income for maintenance expenses, if any. This rule applies to residential buildings rented out to individuals.

If the property is rented for commercial purposes, the income is subject to rental income tax regardless of amount. Therefore, if you earn rental income, you must declare your annual rental income to the tax office. Online services are generally available for declaration.

NOTE: Berk Çektir is a licensed attorney at law and available to answer questions on the legal aspects of living in Turkey. Send enquiries to b.cektir@todayszaman.com. The names of the readers are disclosed only upon written approval of the sender.