Landlords' tax burden is increasing! New regulation on the horizon

The government has begun preparations for tax reform. According to a tax reform draft that AKP lawmakers are preparing to bring to the TBMM at the beginning of June, the tax burden on landlords will increase. Under this draft, the 33 thousand lira exemption that allows landlords who rent out their homes at lower rates to pay less income tax is being abolished. 

HIKES ARE INEVITABLE

According to a report in Sözcü newspaper, under the tax reform draft that AKP lawmakers are preparing to bring to the TBMM at the beginning of June, the 33 thousand lira exemption that allows landlords who rent out their homes at lower rates to pay less income tax is being abolished.

According to the reform draft, landlords who rent out their homes will be taxed at rates starting from 15 percent and going up to 40 percent on the rental income they earn in a year, without any deductions applied.

The new tax burden will be applied starting from the rental income earned this year. Under the current regulation, landlords who earn rental income pay their taxes by choosing one of the 'lump-sum expense' or 'actual expense' methods. For landlords who choose the lump-sum expense method, the tax base is determined by increasing it each year and deducting the set exemption amount. For example, the exemption amount this year is 33 thousand lira. Those who earn rental income below the exemption amount are not taxed. For rental income earned above the exemption amount, tax is calculated on the remaining amount after the 33 thousand lira exemption deduction is applied.

With the abolition of the exemption, the tax burden on landlords, especially those who rent out their homes at lower amounts, will increase. For example, those who earn 10 thousand lira in rental income will have to pay 18 thousand 967 lira in taxes instead of 11 thousand 560 lira. The tax burden on these landlords will increase by 64 percent.

FINANCE MINISTRY WITHOUT DEDUCTIONS...

It is considered certain that landlords, whose tax burden will increase with the abolition of the exemption, will reflect the increased costs onto the rent. It is stated that landlords who rely on rental income for their livelihood, in particular, will be forced to make this reflection.

With the removal of the 25 percent limit on rent increases, there will be no obstacles left to reflecting costs onto rents as hikes. As rents increase, the Ministry of Finance will have the opportunity to collect more taxes without making any deductions. 

NO MORE CHEAP RENT 

The complete abolition of the exemption on rental income will place a heavy burden on landlords, especially those who rent out their homes at lower amounts. For example, a landlord who rents out their home for 5 thousand lira paid only 3 thousand 910 lira in taxes this year thanks to the exemptions. Under the new system, the tax this landlord will pay will rise to 9 thousand lira.

News Source: 12punto