What is free rent, what are its conditions?

What is free rent, what are its conditions? Property owners have the right to rent their property to their children, relatives or acquaintances without demanding rent. This type of rent, which is done without a rental fee, is called free rent. As with other real estate leases, the lease agreement is signed for free rent.
What are the features of a free lease? The lease agreement contains information about the financial responsibilities of the parties, such as the rental price and the length of the lease. Also, the owner of the property must pay the income tax specified in the rental agreement. However, when a family tenancy agreement is entered into, the property owner is not required to pay income tax. Parents, children, grandchildren, grandparents and siblings can be rented for free with no need to rent. This rent is not subject to income tax.
What are the conditions of free rent? According to Article 73 of Income Tax Law No. 193, free rent, which does not require a tax declaration, can only be given to parents, children, grandchildren, grandparents, great-grandparents, and siblings. Relatives or acquaintances other than those specified in the law cannot be rented for free. Only one free rental can be created for the residence of mother, father, grandfather, grandmother, grandchild, child or sibling. For example, if a person who owns a property has rented his house to his child for free, he cannot rent it to other relatives mentioned in the article. If the other house is allocated for the use of the same child or other relatives, he is required to pay tax on the income of the previous rent.
In what circumstances is it necessary to pay tax on rental income? Even if free rent is given to friends or other relatives, the property owner is required to pay tax. The income tax to be paid is calculated on the equivalent of the rental price. The rental value is attributed to the minimum declared rental amount of a property. For information on how to calculate comparable rental prices, see "How much was the previous rental worth?" You can read our article. How much is the equivalent rent? People who earn income from rent are required to pay taxes along with the declaration. Prior rental value is also a term related to this tax system. According to Article 73 of the Income Tax Law, the record rental value is the minimum amount that must be declared for rented properties.
When is the previous rental price announced? This value, which shows the rental income of the previous year, is announced in the first three months of each year. For example, property owners declare the 2020 rental price equivalent in the first 3 months of 2021. How is the rental price equivalent calculated? The fact that the previous rental price is lower than the rental price may cause problems. If the rental price is shown to be lower than the comparable value, the Ministry of Finance can initiate an investigation against the owner. To prepare the rental price according to the instructions, it is necessary to pay attention to the following points:
The imputed rental value must correspond to 5% of the property tax value of the leased property. For example, the previous rental value of a property with a property tax value of 900 thousand liras is 45 thousand liras. If the property tax is calculated above 500 thousand liras, it is required to provide a minimum historical value of 25 thousand liras. When is the equivalent rental fee applicable? Can't it? There are cases where the previous rental fee is not required. These conditions are based on Article 73 of the Income Tax Law. If the following conditions are documented, there is no need to apply this fee. The following are taken from the relevant law:
If the empty properties are given to others for free for maintenance. If the buildings are allocated for the residence of the owner's son (parents and parents), fürug (children and grandchildren) and siblings. If The owner and his relatives also live in the same house or apartment, for the rent of apartments included in the public budget, additional budget offices, special offices of the province and municipalities, and other public institutions and organizations, the rental price is not calculated.