Following recent regulatory changes, the requirements for valuation reports in property purchases by foreigners in Turkey have been revised. Under Circular No. 2024/4, issued on June 3, 2024, by the Turkish General Directorate of Land Registry and Cadastre, foreign buyers are no longer obliged to obtain a real estate valuation report for standard property acquisitions completed after June 13, 2024.
This update significantly simplifies the purchasing process for international buyers. However, it is important to note that a valuation report continues to be compulsory when a property purchase is intended for Turkish citizenship by investment or residence permit applications. In such cases, the appraisal must still be completed prior to the title deed transfer to ensure compliance with official procedures.
What is Real Estate Appraisal Report? How Does it Work?
The fee for an SPK-approved appraisal report is not fixed and is determined according to the size, type, and specific features of the property. Costs may vary depending on factors such as the total area, location, and complexity of the valuation. The appraisal fee is paid to an authorized and licensed valuation company in line with official procedures.
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's 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 an independent appraisal expert licensed by the Capital Market Board, the highest regulation authority of financing and banking in Turkey. Contact us for more information.
