Real Estate Appraisal Report is Obligatory Now!
On the 15th of February, according to the circular published by TKGM (Turkish General Directorate of Land Registry and Cadastre), from the 4th of March 2019, foreign property buyers in Turkey will need a real estate appraisal report citing the values of the property before the transaction is approved and the title deed is transferred. "https://tkgm.gov.tr"
Turkish Government wants to secure foreign buyers and investors against fraud and block high prices property sales. The new law that was initially planned to be in place nationwide by 2022 has been bought forward, following a successful pilot scheme. A new department within the TKGM will handle all valuations and reports.
What is Real Estate Appraisal Report? How Does it Work?
The fee of the SPK validated appraisal report is between 1.000 TL and 2.0000 TL and this fee will be paid directly to the new real estate appraisal department. Therefore, foreign buyers should not accept to deal with any estate agency who quotes more or claim they are licensed to carry out the valuation.
The validity of appraisal reports is three months from the approval. The appraisal report can be used even if the sale is canceled, and the seller can find another buyer. If the property is at the under construction or off plan stage, the value will be the estimation at the time of completion. The value specified in the amount of the valuation report will also appear on the title deed.
After deed transactions, the TAKBIS (Land Registry and Cadastre Information System) adds the report to their system before returning it to the buyer. The process completion time is 3 days for Istanbul and 6 days for other cities.
Real Estate Appraisal Department of Land Registry and Cadastre
In January 2019, the new Real Estate Appraisal Department (Taşınmaz Değerleme Daire Başkanlığı in Turkish) has been established under the Land Registry and Cadastre (Tapu ve Kadastro Genel Müdürlüğü in Turkish). Until this time, the property developers or constructors were declaring the sales price as half of the real sales value. Therefore also, the state was losing tax and other related property taxes. Now, the Turkish government aims to take the exact amount of conveyance tax. Real Estate Appraisal Department will determine the value using many methods, add all information into one system and publish statistics and reports from researches.
Financial Impacts - Tax Implications
The new law aims to ensure implementing the applicable tax, by declaring the correct property price instead of a lower amount on Tapu to avoid paying taxes. Although sellers in Istanbul usually state the correct selling price, recording the value of a property at a lower rate is a common occurrence in many other cities.
When the construction company has already signed title deeds at a lower price than their actual price, They may face troubles with the tax office, because irregularities in addresses will be flagged up in the system. Foreigners who have already signed for title deeds listing the lower price will also find themselves with a hefty tax bill if they sell it before five years because of capital gains tax laws.
Who are SPK Validated Experts?
SPK is the Capital Market Board which means Sermaye Piyasası Kurulu in Turkish. It is the public institution that regulates the functioning of capital markets and protects the rights of investors. SPK' employees control and regulate capital movements in Turkey. So, it is the authority of stock exchanges and banks in Turkish.
The valuation report includes the following documents;
- Detail of all title deed
- Property located on a map with coordinates
- Property photos
- Equivalent property prices
- Approval of the price
- Current debt condition of the property
- Confirmation by the Land Registry and Cadastre General Directorate
Istanbul Homes always provide you the best and reliable services with independent appraisal expert licensed by the Capital Market Board, the highest regulation authority of financing and banking in Turkey. Contact us for more information.
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