The month of July marks the second phase of tax obligations for millions of property owners who earn rental income. Tax returns for rental income earned in the 2025 calendar year were filed in March; however, the deadline for the second installment of the income tax assessed based on these returns has been set for July 31, 2026. From a consulting perspective, meeting this deadline is of great importance both to avoid penalties and to preserve eligibility for tax exemptions.
Filing Period and Payment Schedule
Property owners who earned rental income from residential, commercial, or other real estate in 2025 filed their returns between March 1 and 31, 2026, through the Revenue Administration’s Ready Declaration System. The calculated income tax is collected in two equal installments to facilitate payment for taxpayers. While the deadline for the first installment, which must be paid along with stamp tax, expires on March 31, the final payment date for the second installment has been set for July 31, 2026. Taxpayers who wish to do so may also pay the entire tax in advance in March.
Thresholds for the Obligation to File a Tax Return
The obligation to file a tax return for rental income in 2025 arises when the thresholds set for each type of income are exceeded. There is an annual exemption of 47,000 TL for residential rental income; income exceeding this amount must be reported. For commercial property rentals, taxpayers whose total gross rental income exceeds 330,000 TL are required to file a tax return. For rental income not subject to withholding tax or exemptions, the filing threshold is 18,000 TL.
Important Considerations Regarding the Application of Exemptions
The 47,000 TL exemption applied to residential rental income is valid only for income derived from real estate rented out as a residence. If rental income is derived from more than one residence, the exemption can be applied only once to the total rental income. If multiple individuals are co-owners of the same residence, the exemption is calculated separately for each co-owner.
Those ineligible for the exemption: Individuals required to file a tax return due to commercial, agricultural, or professional income, as well as those whose total gross taxable income exceeds 1,200,000 TL, are not eligible for the exemption. Additionally, taxpayers who fail to report their rental income on time or who underreport it lose their right to the exemption.
Two Methods for Deducting Expenses
Taxpayers who earn rental income can choose one of two different methods for deducting expenses when calculating their taxable income. Under the actual expense method, expenses such as lighting, heating, water, elevator, insurance, taxes, fees, maintenance, repairs, and depreciation can be deducted from income upon presentation of supporting documentation. Under the flat-rate expense method, 15% of rental income is considered an expense. Taxpayers who choose the flat-rate method cannot switch to another method for two years.
Payment Channels
Second installment payments can be made online via the Revenue Administration’s Digital Tax Office using a debit or credit card. Additionally, payments can be made via bank transfer or account through participating banks, as well as at tax office cashier desks and PTT branches.
If tax obligations related to rental income are not fulfilled on time, taxpayers may lose their right to the exemption and face late payment interest and tax evasion penalties. Completing the second installment payment by July 31, 2026, is critical to preventing potential adverse consequences. For detailed information on this matter and support regarding your rental income tax return processes, please contact the expert team at Bu Müşavirlik. We are here to help you fulfill your tax obligations accurately and on time.
