The proposal for a reduction in title deed fees will be presented to the Grand National Assembly of Turkey (TBMM). There is a discussion about lowering the fee rates for real estate transactions.

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The property tax, which has been debated for years in Turkey, is being brought to the agenda of the Turkish Grand National Assembly (TBMM). It is planned to resolve the high amount paid in real estate purchases and sales through an economic omnibus bill to be presented to the TBMM.

The amount of tax to be paid for real estate transactions is determined based on the declared value set by municipalities. However, there can be significant differences between the municipality's value and the actual value of the property. It is planned to include a provision in the omnibus bill to address the informalities that may arise here. According to the regulation being emphasized, the property tax rates collected from the buyer and seller will be reduced.

WHAT IS PROPERTY TAX AND HOW IS IT DETERMINED?

According to a report by Milliyet newspaper, property taxes are collected based on the declared value. The minimum amount of the declared value is the municipality's market value. It is requested that sales be shown based on the actual purchase price rather than the municipality's market value. The tax rate is collected separately from the buyer and seller at a rate of 0.2% of the sale price. In other words, 2% from the buyer, 2% from the seller, totaling 4% in property tax.

PENALTY FOR NOT REFLECTING THE ACTUAL PURCHASE PRICE

When paying property taxes, the parties can agree that only the buyer, the seller, or both can pay the tax. To avoid penalties, the buyer and seller must declare the actual purchase price. This declared value must not be lower than the property tax value, and it must be declared at least at this minimum level. If the value used for the property transaction does not reflect the reality, and if a lower amount than the property tax value is paid, the shortfall in tax can be collected from the buyer and seller with a 25% tax penalty. Those who cause a loss of this tax by declaring a lower amount can submit a letter of remorse regarding this, and in this case, they can pay the shortfall again.

PROPERTY TAXES AS A REVENUE SOURCE FOR THE STATE

There is a significant amount of transactions taking place in land registry offices. Looking at the sales figures for the first 8 months of the year, there were 1 million 770 thousand sales transactions. Nearly 48 billion TL of property tax revenue came from sales. The income from other transactions is around 2.5 billion TL. Property tax revenues are an important source of income for the state. In the first 8 months, there was a property tax revenue of 50 billion 536 million TL. The values shown here actually appear to be lower at different rates according to the types of real estate. There is a minimum difference of 20 times between the actual sale price and the values shown in the registry for land and plots. In apartment sales, this difference is over 5 times. In sales of mortgaged apartments, we can say it is about 2.5 times. We need the actual value part here.

IT HAS BEEN TRIED BEFORE, BUT...

The planned regulation has been attempted several times before. One of these was the requirement for an appraisal report for all real estate sales. It was returned from the Parliament about 3.5 years ago, and a collective valuation system could not be established. A different study was proposed in the Strategic Action Plan of the General Directorate of Land Registry and Cadastre. It was suggested to establish a real estate value information center integrated into the Land Registry and Cadastre information system. With this real estate value information center, real estate value changes would be tracked, prices occurring in property transactions would be recorded, and it would provide a basis for expert reports in courts, as well as serve as a basis for determining the purchase and sale value in real estate and correcting property taxes and real estate taxes.

WILL VALUE PEACE BE A SOLUTION?

In the land registry and cadastre legislation, the aim is to increase tax revenues through collective or individual valuation methods. There is a need for secure money transfer systems from the perspective of citizens in the land registry. There has been a significant problem related to capital gains in Turkey for a long time. There is a need for a value peace here. Until value peace is achieved, it is not possible to reach the opportunity to show the actual value in the land registry. The high rate of property taxes creates a complex situation for buyers and sellers.

HOW MUCH IS THE PROPERTY TAX FOR A 1 MILLION TL SALE?

In a sale shown at 1 million TL, there is a total of 40 thousand TL in property tax, with 20 thousand TL for the buyer and 20 thousand TL for the seller. An additional fee, known as the revolving fund fee for property transactions, is added according to regional coefficients. This fee has a coefficient that varies by city.

THE SECTOR'S EXPECTATION IS 2%

Real estate experts say that one of the first steps to ensure the declaration of the actual value in the sector is to reduce the property tax to around 1%. A regulation is requested to change the property tax so that the buyer and seller pay a total of 2%. Additionally, a temporary declaration amnesty for real estate sales is among the sector's expectations regarding the actual value in real estate.