Are Renovation Costs Deducted From Rental Income?

Are renovation costs deducted from rental income?

Income from the rental of immovable property is subject to taxation in accordance with the Law on Income Tax. Some expenses can be deducted from tax payments

Repair expenses for the real estate leased by the lessor, as well as maintenance and maintenance expenses can be deducted from the rental income tax.

actual expense method is chosen and the exception applied to housing rental income is taken advantage of, the part of the actual expense amount that hits the exception will not be deductible from gross proceeds.

The deductible part of expenses that hit taxable income can be calculated using the formula below.

Discountable Expense = Total Expense x Taxable Revenue*/Total Revenue

(*) Taxable Revenue = Total Revenue — Residential Rental Income Exception

Example..

Mrs. (D) rented the house she owned in 2014 and earned a rental income of 20.000 TL. In relation to the real estate, the taxpayer spent 5,000 TL and chose the real expense method in relation to the

The amount that the taxpayer can deduct as an actual expense will be equal to the part of the total expense in the amount of 5,000 TL that hits the taxable income.

Taxable Revenue = 20.000 — 3,300 = 16,700 TL

Downloadable Expense = (5.000 x 16,700)/20.000 = 4,175 TL