19.12.2025 09:55
With the new tax package published in the Official Gazette and coming into effect, significant regulations have been made regarding property tax and rental income. A 100% cap has been imposed on the exorbitant increases in property tax, while the exemption applied to rental income has been largely narrowed. The income tax exemption for residential rental income will be removed, except for retirees and those receiving widow and orphan pensions.
The new tax package published in the Official Gazette and now in effect includes significant changes that closely affect millions of citizens. While regulations have been made in many areas, from vehicle sales to social security premiums, decisions regarding property tax and rental income have particularly drawn attention.
100% LIMIT ON PROPERTY TAX INCREASE
A new limit has been introduced to control the high increases in property tax bases experienced in recent years. Accordingly, the tax values for buildings and land to be determined for the year 2026 cannot exceed twice the values for the year 2025. In other words, the increase in property tax value has been limited to 100%.
Within the scope of the regulation, the authorities of municipalities have also been clarified. Municipalities will not be able to demand any amount above this legally determined limit. On the other hand, property tax values will continue to be increased each year based on the previous year's value in accordance with the revaluation rate.
RENTAL INCOME TAX EXEMPTION NARROWED
One of the most notable headlines of the tax package was the exceptions regarding rental income. The tax exemption applied to residential rental income has largely been removed. With the new regulation, only retirees and those receiving widow and orphan pensions will continue to benefit from the rental income exemption.
Taxpayers outside of these groups will be required to pay income tax regardless of how low their rental income is. Thus, the exemption that was previously applied up to a certain amount has come to an end for a wide range of taxpayers.
NEW RESTRICTION ON EXPENSE DEDUCTION
Another significant change regarding rental income was made in the expense deduction application. With the exception of residences, the interest on loans used for the acquisition of rental properties can no longer be shown as an expense in determining rental income. This regulation will directly affect property owners who rent out for business and commercial purposes.