Foreign Buyers in Turkey Need a Real Estate Valuation Report
A circular published by the TKGM (Turkish General Directorate of Land Registry and Cadastre) on the 15th of February has announced that from the 4th of March 2019, foreign property buyers in Turkey will need a real estate appraisal report citing the value of the property before the transaction can be approved and deeds handed over. "https://tkgm.gov.tr"
Turkish Government aims to secure foreign buyers' investments against fraud. This report will keep from overpriced 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.
About the Real Estate Appraisal Reports
The cost of the SPK validated appraisal report will be between 1.000 to 2.000 Turkish Lira and buyers will pay this fee directly to the new real estate appraisal department. Foreign buyers should refuse to do business with any estate agent quoting more or claiming they are licensed to carry out the valuation.
Appraisal reports will be valid for three months from approval. In the event of a canceled sale, if the seller finds another buyer, they can use the same appraisal report. If the property is at the off-plan or construction stage, the value will be the estimate at the time of completion. The value cited on the amount of the appraisal report will also appear on the title deeds.
After the Tapu is signed over, the Land Registry and Cadastre Information System will add the report to their system before returning it to the buyer. The expected time of completion is three days for Istanbul and six days for other provinces.
Possible Tax Implications
The new regulation aims to cut out opportunities to avoid taxes by declaring lower property amounts on Tapu's. Although sellers in Istanbul usually state the correct selling price, in many other provinces, recording the value of a property at a lower rate is a common occurrence.
In the event, a builder has already signed over title deeds at a lower price than they are sold for, they may find themselves at the wrath of the taxman, 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.
Real Estate Appraisal Department of Land Registry and Cadastre
There is a new Real Estate Appraisal Department (Taşınmaz Değerleme Daire Başkanlığı) established under the Land Registry and Cadastre (Tapu ve Kadastro Genel Müdürlüğü in Turkish) in January 2019. Turkish government wants to take an exact amount of conveyance tax. Generally, the property developers were declaring the sales price as a half of the real sales value. Therefore, the state was losing tax and other related property taxes. The new department in charge of real estate valuation will determine the value using a wide range of methods and collate all information into one system. They will also publish statistics and reports from studies. The methods used for valuation will be in line with international practices.
SPK Validated Experts
SPK is shortened name of Sermaye Piyasası Kurulu in Turkish which means Capital Market Board. It is the Turkish authority of stock exchanges and banks. They control and regulate capital movements in Turkey. Appraisal companies are professional institutions that will adhere to capital market regulations. To prevent a conflict of interest, appraisal companies and employees may not work as or for real estate agents.
Valuation reports hold the following information;
- All title deeds details
- Location of property on a map with coordinates
- Photos of the property
- Prices of equivalent properties
- Confirmation of the price
- Current debt condition of the property
- Confirmed acceptance with the land registry and cadastre general directorate.
Antalya Homes uses independent appraisal experts, licensed by the Capital Market Board, the highest regulation authority of financing and banking in Turkey. Read more here.