Rental checks begin

The Department of Finance is cracking down on untaxed rental income. The government agency put in place a new program three weeks ago, where officials go door-to-door to check how rent is being paid. This move has come after the ministry made it mandatory, on Nov. 1, to pay rent through traceable means, mainly bank transactions. The idea is to eliminate the elusive cash economy.

The door-to-door campaign, to inform citizens that they should not be paying cash to landlords, will start with the Ankara Tax Administration and serve as a pilot for similar projects in other regions.

The agency has put 400 employees to work in Ankara. The inspectors started their campaign in Ankara's high-rent areas and will make their way across the entire city.

The campaign, which takes place mostly during weekends, asks residents whether they own the unit in which they live or not, and then gathers information on the landlord. The residents of rental units are asked how much their rent is and the information is registered.

Inspectors are also handing out a brochure titled "To the attention of landowners and renters." This outlines the new mandatory requirements on rental payments. The Nov. 1 law states any rent over YTL 500 must be paid through a bank. "In 2008, rental payments that do not comply with the new law will be penalized a minimum of YTL 320 for residential units, YTL 680 to 1,490 for commercial properties with a 5 percent penalty fee for each unlawful payment. From 2009 onward, fees will be reviewed and applied accordingly.

Penalties
To avoid being penalized, it will be mandatory for rental payments to be made from banks or post offices," the brochure states. Officials from the campaign have already visited over 40,000 homes, President of the Ankara Tax Administration Şinasi Candan said. Over 30,000 units have been registered, but there is more to do Ğ there are 2.75 millio residential, commercial and properties open for development in Ankara alone, Candan said.

"We will complete the task at hand in the shortest possible time. The product of our inspections will be a registry of citizenship numbers of homeowners and renters and their addresses if available. In addition to this information, we will collaborate with banks to obtain rental payment information. We will cross-reference and compare our findings. This will allow us to determine not only people who receive rent in cash but also those who do not pay tax on their rental income," Candan said.

Similar projects are planned for other regions. The idea is to have an up-to-date and accurate account of homeowners and renters in the country. All variables will be recorded and will form the basis of a new income tax law to codify tax amounts to be imposed on the receipt of rent.

Opponents of the new law have said having to pay rent through a bank or post office creates an undue burden on renters as these institutions charge transaction fees. Some banks and the post office have introduced ways to reduce or eliminate transaction fees.