Tax audit from the Ministry of Finance: They will visit 2 million homes one by one

The Ministry of Finance has launched an initiative that closely concerns property owners. The Ministry has initiated a strict audit regarding 2023 rental income, which is to be declared in March 2024.

By comparing data obtained from the General Directorate of Land Registry and Cadastre and the General Directorate of Population and Citizenship Affairs, approximately 4.5 million homes with the potential to generate rental income were analyzed in terms of tenants and ownership.

2 MILLION HOMES TO BE AUDITED

By comparing the residents of these homes with the owners, and excluding homes occupied by the owners' parents, children, or siblings, as well as homes for which annual income tax returns have already been filed due to rental income, it was determined that approximately 2 million homes have the potential to generate rental income.

The Ministry of Finance has decided to go door-to-door as part of a rigorous effort to prevent 2023 rental income from being left untaxed. By analyzing the information obtained from institutions, the Ministry of Finance will reach taxpayers who have not filed income tax returns despite earning rental income.

The Ministry of Finance will visit 2 million homes one by one to identify which ones are rented and who is living in them, and will record this information.

The first letters have already begun to reach the residents of these homes. Accordingly, tenants are being asked to provide information regarding their rental agreements, the date they began renting, the rent amount, and how they make their payments.

IS TAX PAYABLE IF A HOME IS LEFT TO A RELATIVE WITHOUT CHARGING RENT?

A property owner may allow a relative to use their home without charging rent. However, even if no rent is collected, income tax must be paid for homes left for a relative's use. In other words, you must pay tax even if you do not collect rent. To prevent tax evasion in this way, a "deemed rental value" regulation has been included in the Income Tax Law.

According to Article 73 of the Income Tax Law, titled "Deemed Rental Value," the deemed rental value of real estate left for the use of others without charging rent is considered the rent for these properties. The deemed rental value for residential properties is set at 5 percent of the property's real estate tax value. According to this regulation, for example, the deemed rental value of a home left for others to use free of charge becomes the rent for that property. Tax must also be paid on this deemed rental value.

However, according to this regulation, the deemed rental value is not declared and no income tax is paid for homes allocated free of charge for the residence of close relatives such as the owners' parents, grandparents, children, grandchildren, or siblings. However, according to the law, "deemed rental value" must be paid if an uncle, aunt, nephew, niece, or mother-in-law/father-in-law is living in the home.

DEEMED RENTAL VALUE IS KNOWN AS THE "MOTHER-IN-LAW TAX"

Among the public, the tax on homes given to relatives who are not close is called the "Mother-in-Law Tax."

If a person allows their mother to live in their home without charging rent, they do not pay tax, but if they allow their mother-in-law to live there, they must pay tax. The same situation applies to one's spouse as well.

News Source: 12punto