Reduction of Loan Interest From Rent Income

Today, the method that is common in the acquisition of housing is in the form of buying with credit. The length of the hedge credit ratios, the decrease in the interest rates from time to time, is almost as antagonistic as the incentive of the method. In this way, some of the residential areas prefer not to rent the property, considering the contribution of the residence to the use of the residence itself and the contribution of the part to the repayment of the loan. Most of the residents who are saving or speculative give the rented house to the rent.

In this article, we would like to examine whether the exchange rate of the loan interest paid and the exchange rate paid in case of foreign currency borrowing can be deducted from the rent income in the case that the houses acquired in this way are given to the rent.

Regarding Location, article 72 of the Income Tax Law states that "in the real estate capital revenues, the gross proceeds are the amount of rental fees collected in cash or in cash for the year or the previous years in the year when the goods and rights stated in the 70th article are given to the rent" In Article 71, it was stated that there is a positive difference remaining after the expenses for realization of gross income, gross income and gaining income in the will of real estate capital were reduced.

As is known, taxpayers in the taxation of rent income have a choice between the actual expense method and the method of disbursement. The deduction of the interest or exchange rate differences related to the credit used in the acquisition of housing is only for those who prefer the real expenditure method. Even if this method is preferred, it is not possible to consider the principal repayment as an expense (the principal payments can be deducted as depreciation as a cost element).


In the article 74 of the Law, which refers to the actual expenditure method, the following items are added: "In the event of finding a net income, except for the ones that hit the gross revenues exempted according to Article 21, the gross income is deducted" The interests of the debt obligations "can be reduced.

In accordance with these regulations, it is possible to deduct the interest of the credits used for the acquisition of housing from the rental income, if the corresponding house is provided to the rent, except for the part corresponding to the custom.

It is possible to use the credit not only from the bank but also from the participation banks. Participants who use loans from participating banks are allowed to make a reduction by taking into account the payments in the form of profit share shown in lieu of interest on the loan repayment notification list.

It does not matter whether the loan is a home loan or not. Because of their interest and other costs, people may prefer to use them in different types (such as consumer loans or commercial loans). What is important here is to prove the link between the credit used and the purchase of housing.

I have emphasized above that credit principal payments can not be deducted directly from rental income. It is not a matter of considering foreign exchange differences related to principal installments in foreign currency loans as an expense. In other words, it is possible to deduct the depreciation amount calculated from the new value obtained by adding the exchange differences paid in respect of the capital installment to the cost of the acquired real estate.The amount of interest that the taxpayer may fall is not limited to the rent income from the said real estate. Therefore, the taxpayer can deduct the interest expense from the total immovable rental income that he / she obtained together with the loan and the immovable acquired.

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