Calculation of deductible expenses in case of exception in actual expenses method

Where a taxpayer chooses the actual expenses method and benefits from the exception applied to rental income from house, the amount of actual expenses corresponding to exception is not deductible from gross revenue.

The deductible amount is calculated as follows:

Deductible expenses = Total Expenses x Taxable Revenue*

Total Revenue

(*) Taxable Revenue = Total Revenue – Exception for Rental Income from House

Example: Taxpayer (C) rented her house in 2019 and obtained 44.000 TL of rental income. Taxpayer, who has no any other income, incurred 10.000 TL of expenditure for his property and chooses the actual expenses method.

The amount that taxpayer can deduct as actual expenses will be the amount that corresponds to the taxable revenue of the total expense for 10.000 TL.

Taxable Revenue = 44.000 – 5.400= 38.600 TL

Deductible expense= (10.000 x 38.600) / 44.000= 8.772,72 TL

Deduction of Expenses in the Lump Sum Expenses Method

Taxpayers who have opted for the lump sum method can after deducting the amount of exception from their rental income, set off the lump sum expenses at 15% of the remaining amount against actual expenses.

It is not possible to opt for lump sum expenses method in the case of leasing rights. For instance, taxpayers, who gain office rental income and income from leasing rights, should choose actual expenses method since they should declare rental income from leasing rights at their tax return.

Taxpayers who have opted for the lump sum method can deduct as a Lump sum expenses at 15% of their revenue .Lump sum expenses rate is determined at 15% of the revenue to be applied to rental income from 1/1/2017.

Source: Revenue Administration – Guidebook on Rental Income for Non-Resident Taxpayers
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

2- DEDUCTIBLE EXPENSES ACCORDING TO CORPORATE TAX LAW
In the determination of company’s income calculated like commercial income, a tax payer can deduct expenses stated below from its revenue.

1- Stock certificates and export cost of bonds
2- Incorporation and organizational costs
3- General meeting, business combinations, denouncement and liquidation costs
4- Insurance costs
5- Profit shares of partnership of commendams
6- R&D discount
7- Creditors without interest-fee and profit shares paid to private financial institutions

3- LOSS OFFSETTING AND OTHER DISCOUNTS
3.1- Loss offsetting
3.1.1- Previous losses
3.1.2- Losses of acquired company
3.1.3- Overseas losses
3.2- Donations and subsidies
3.3- Sponsorship costs
3.4- Dividends

Source: Corporate Tax Law numbered 5520 – Income Tax Law numbered 193

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.