Correct Value of Tapu

[Mohammed Nawaz]

Can anyone please advise where we stand legally if a builder refuses to agree to declare the true value for a property on tapu.

We want to declare what we paid for it and pay the respective 1.5% tax. We've have paid all our money and are now at the end of the long protracted saga which I'm sure many of you are all too familiar with that has taken 3 years. The builder refuses to declare the true value of the property due to him not wanting to declare what he sold the property for and hence paying tax on the sum.

Is there anyway he can be forced to do so without jepardising the prospect of not getting the tapu for the property. I can't believe that builders are being allowed to get away with this and nothing is being done about it as it's the buyer who is always loosing out.

 

[PASH]

From my experience, there are very few Tapu's that actually have the true value but i would come to a compromise with your builder as the Tapu is the important document. My friend had a value of 30,000YTL put on his tapu and paid over 100,000 pounds. When his neighbour bought next to him, he put 60,000 YTL on his Tapu. My friend is currently being investigated, his neighbour is not! My advice is, just do not make it too low and if you live on a site, ask your neighbours what value is on their Tapus.

 

[carolk]

Hi, have a read through this.

http://www.turkishliving.com/forums/turkish-legal-helpdesk/22785-declared-price-title-deed.html

 

[Helenm150]

Declared Value on a TAPU

Prior to 06.06.2008 taxation was based on the minimum value set by the municipality. The new regulation came into force on 06.06.2008. It has two very important implications:

1) The basis for the declared value and the set penalty: Clause 63 of the Charges Law (Harçlar Kanunu), states that the real sale-purchase price must now be the base for the property transfer tax.

With this new law in force, should the value of the property be declared at the land registry is over the municipality minimum value but lower than the real contractual price, and this is FOUND OUT BY THE AUTHORITIES, then the missing tax amount will be calculated based on the difference between the real purchase price and the declared one, plus 25% interest as a penalty; this penalty to be collected from the parties.

The Finance Ministry Office will have access to the records of housing loan companies, developers and also from the notary offices in order to establish the real purchase price. Even though this situation may come to light in later years, the said authorities could claim the difference in the tax amount plus 25% interest.

2) 5 year time scale (capital gain tax effect) The second set back of the low declaration is the effect on the tax base should the property be sold within 5 years.

According to Clause 80 of the Tax Procedure Law; the “re-evaluation tax” (equivalent to what we know as ‘Capital Gains Tax’ in England), is collected from the people who sell their properties within 5 years from the official purchase date. The tax base is the difference between the declared value on the title deed and the new purchase-sales value that will be registered on the land registry records when the property is re-sold.

The Turkish government publishes the re-evaluation rates for the tax basis at the beginning of each year. The new values to be declared are based on this rate of increase. As per the said regulation, the purchase value of the property has to be increased for each year; therefore capital income tax needs to be paid should there be a sale in the following years.

If the seller’s original Tapu shows an under declared value and the real (new) purchase price is to be shown on the new Tapu, then the difference would be considerably more.

However, the calculation of the tax level is done according to the income tax level. Therefore, there is an exemption level within this “re-evaluation tax” and for the year 2008, the Turkish Government set this exemption level as TL6,800.00 which is to be deducted from the difference. The remainder being the amount subject to income tax, at a percentage depending upon the difference and the income tax level of the person in Turkey.

Recently, the government has declared, with the 5th economic support package, that the rate of the property transfer tax is reduced from 3% to 1%. However this will be applicable for three months only until 30.06.2009. Within the said period, lower declaration may not be applied as the transfer tax is already reduced. We believe that, in terms of collection of the tax amounts, it would be more beneficial for the government to regulate low tax rates instead of collecting the amounts by way of tax loss controls.

Although the under declaration appears to be common practice ın Turkey, our advice would be to declare the real purchase price in order to avoid negative consequences. The parties should come to an agreement on this issue at the outset of the purchasing process before signing the sale-purchase contract.

 

[celtic]

Can anyone please advise where we stand legally if a builder refuses to agree to declare the true value for a property on tapu.

We want to declare what we paid for it and pay the respective 1.5% tax. We've have paid all our money and are now at the end of the long protracted saga which I'm sure many of you are all too familiar with that has taken 3 years. The builder refuses to declare the true value of the property due to him not wanting to declare what he sold the property for and hence paying tax on the sum.

Is there anyway he can be forced to do so without jepardising the prospect of not getting the tapu for the property. I can't believe that builders are being allowed to get away with this and nothing is being done about it as it's the buyer who is always loosing out.

Mohammed,

If there's a notarized sale contract that you are holding an issue of, you can file a case in the courts in order to demand the judge to order your builder to transfer the ownership in your name. This process may take nearly a year but at the end you'll have acquired the ownership of the property with the true price that you actually payed the builder.

From the other hand, if you are not holding a notarized contract, there's a longer and more tiresome process waiting for you than filing a case and waiting for a year.

Good luck.

 

[traveller]

Declared Value on a TAPU

Prior to 06.06.2008 taxation was based on the minimum value set by the municipality. The new regulation came into force on 06.06.2008. It has two very important implications:

1) The basis for the declared value and the set penalty: Clause 63 of the Charges Law (Harçlar Kanunu), states that the real sale-purchase price must now be the base for the property transfer tax. .......

2) 5 year time scale (capital gain tax effect) The second set back of the low declaration is the effect on the tax base should the property be sold within 5 years. ....

If the seller’s original Tapu shows an under declared value and the real (new) purchase price is to be shown on the new Tapu, then the difference would be considerably more.

Having taken all that on board, what do you do if you want to sell within the 5 years, for the same actual amount that you paid, (and you have documents to prove what you paid) but your Tapu was issued under the previous rules and has the council valuation?

Are you now in the position where, through no fault of your own, suddenly due to a change in the law, you might have to pay CGT on a sale where you have made NO actual profit.

Does anyone know if this change in law is being applied retrospectively, if so there must be hundreds of people falling victim to this latest government cash grab.

 

[les&Tasha]

Yes tax evasion penalties are applied retrospectively. Ignorance of the law is no excuse.

Mr Nawaz were you advised by an avocat? You appear to have paid for a property without obtaining the title deeds. That was a very stupid thing to do. Have you any contracts or declarations which were notarized? Do you have proof of funds transfer into the builders tax registered bank account?

In the absence of any legal proof of the actual sale price my advice would be to go along with the builder and get your tapu at the highest price you can agree. Once you have your tapu I would go to another Avocat and make a notorized declaration of what has happened to the tax office and tapu cadestre. Offer to pay your share of the outstanding tax immediately. Then wait and see what happens. You have admitted being party to a tax fraud and offered to pay up. The builder is going to face a tax inspection...

Les

 

[traveller]

Les&Tash, I assume the first line of your post was in response to my query. I would point out that my Tapu was issued on 04/04/2008, two months before the law changed. That is why I asked the question about retrospective application.

 

[les&Tasha]

Hello Traveller,

I replied to the original poster (Nawaz). He had not yet obtained his tapu, so the priority was to get his deeds then expose the tax fraud.

The article referenced by Helen is from Acacia International. They are excellent lawyers and everyone should respect their view. However the law relating to tapu declaration prices predates predates this regulation. Back in 2004 when we were researching the Turkish Embassy site in London was advising that under declaring the sale price was tax evasion. Perhaps the legal team here would care to comment?

It is now over a year since your tapu was issued and less than 4 years to the expiration of capital taxes. If you have no immediate plans to sell perhaps keeping quiet and waiting would be the best option?

However if you sell in this period then CGT will be due on the difference between the declared purchase price and the declared sale price. The fact that you can prove you paid more than the declared purchase price will mean nothing as you were breaking the law by agreeing to under declare in the first place!

Lots of people have been caught out by this. As I have repeatedly posted on this forum purchasers have nothing to gain by under declaring the purchase price.

Best of luck.

Les

 

[davlins]

Hello Traveller,

I replied to the original poster (Nawaz). He had not yet obtained his tapu, so the priority was to get his deeds then expose the tax fraud.

The article referenced by Helen is from Acacia International. They are excellent lawyers and everyone should respect their view. However the law relating to tapu declaration prices predates predates this regulation. Back in 2004 when we were researching the Turkish Embassy site in London was advising that under declaring the sale price was tax evasion. Perhaps the legal team here would care to comment?

It is now over a year since your tapu was issued and less than 4 years to the expiration of capital taxes. If you have no immediate plans to sell perhaps keeping quiet and waiting would be the best option?

However if you sell in this period then CGT will be due on the difference between the declared purchase price and the declared sale price. The fact that you can prove you paid more than the declared purchase price will mean nothing as you were breaking the law by agreeing to under declare in the first place!

Lots of people have been caught out by this. As I have repeatedly posted on this forum purchasers have nothing to gain by under declaring the purchase price.

Best of luck.

Les

hi.The price on my tapu ıs approx one third of what İ paid to the developer. When İ questioned this i was told that it was the tax office who sets the figure on the Tapu. İs there anything i can do?

 

[les&Tasha]

Davlins,

"When İ questioned this i was told that it was the tax office who sets the figure on the Tapu."

This is a bare faced lie!

Talk means nothing. Emlaks and developers will tell you ANYTHING to get you to go along with their tax evasion. The purchaser is the loser.

If you already have your tapu then there is little you can do. Just wait out the five years until the capital gains taxes expire.

 

[Sweetnighter]

With regard to this debate is it true that prior to 1st January 2007 CAPITAL GAINS TAX was paid on a property if sold within 4 YEARS? Then was increased to 5 years as of 1st January 2007 ?

 

[Martyn]

Yes it was 4 years now 5 years. Not sure of the date but i think it was 2007.

 

[Tess]

Is the 5 years counted from when you pay your money over or from when you are actually in receipt of your Tapu?? Please!

 

[Martyn]

Tapu date Sharon

 

[Sweetnighter]

It is from the date under the heading "TARIHI" on your TAPU

 

[kernowians]

Is the date the one on the TAPU with kat irtifaki or does it start when the TAPU states kat mulkiyeti?

 

[Martyn]

The first one issued, if it was kat irtifaki, like mine, it's from then.

 

[Kalkan regular]

My understanding is that the time limit for CGT is 4 years for properties bought before 1 January 2007 and 5 years for properties bought after 1 january 2007.

We also didn't realise until this year that there was an annual property tax payable to the municipality which is based on the value on the tapu (0.3% for apartments). We hadn't been paying it through ignorance and neither had anyone else in our development. We were fined an additional 60% for late payment!

 

[Mal Lisa]

Hi,

Just read what you said about tapu's etc. Our builder has changed the contract half way through the build and now has issued share certicates depending on how much the property is worth. Is this common practice or do you think we have been stitched up.
The apartments are at Whitebay, Akbuk.

If you can help thanks