CBRT announces: Those with a second home will now pay tax

While there is talk that the government will impose a tax burden on citizens immediately after the elections, the first sign regarding new taxes came from the Central Bank of the Republic of Turkey (CBRT).

The Central Bank has proposed to the government that a progressive additional tax be introduced for those who own more than one residence.

CONCRETE PROPOSALS PRESENTED TO THE GOVERNMENT

The Bank also offered suggestions such as companies building more homes for rent to provide an alternative to landlords who make a living from rent, and transitioning to a 'shared ownership' model. The Central Bank announced its concrete proposals aimed at curbing the rise in housing and rents in its latest inflation report released to the public.

Stating that the 25 percent cap on rent is insufficient to prevent price increases and that more effective structural measures are needed, the Central Bank called for the tracking of rents through a central platform, the establishment and mandatory implementation of standards in leasing, and the introduction of new regulations for the healthy functioning of the rental market.

REGULATION ON HOUSING PURCHASES

The Central Bank listed the new regulations the government should implement in this area as follows:

“With the legal regulations to be made; progressive taxation based on the number of homes owned and a vacant home tax… Implementation of long-term, variable-rate, or threshold-wage-indexed mortgage models with payment flexibility for employees with regular income… Providing loans for housing purchases with interest rates that vary according to the number of homes owned by the household… Steps to be taken in coordination with monetary policy are important for ensuring medium-to-long-term stability in the housing market.”

‘SHARED OWNERSHIP’ SHOULD BE INTRODUCED

The Central Bank also suggested that models applied in various countries be brought to Turkey to help low-income individuals escape renting.

In this context, pointing to the 'shared ownership' model applied in London, the Central Bank said, “For example, in London, first-time homebuyers can participate in programs called 'shared ownership,' where they can purchase at least 25 percent of their first home, pay rent for the remaining share, and purchase the rest of the share of the house in the future. Initiating a 'shared ownership' practice, especially in metropolitan centers where housing prices remain high, could enable households with insufficient savings to become homeowners.”

The Central Bank listed other country examples as follows:

Netherlands: The publicly owned housing stock is distributed to various income groups at more affordable rents compared to the rent levels formed in the free market.

Italy: Rents for social housing are subsidized at rates determined in accordance with the income levels of those in need.

COMPANIES SHOULD BUILD AND RENT HOMES

The report also suggested that companies be encouraged to increase the number of rental homes. The proposal was expressed as follows:

“In addition to the public sector, the private sector building homes for the purpose of renting is another step toward increasing the supply of rental housing. As seen in global examples, the leasing of homes by private sector companies alongside individual investors will increase institutionalization and facilitate the tracking, regulation, and taxation of rents. The opening of these companies to the public through capital markets and the diversification of their portfolios will reduce the risks faced by individual investors when renting homes, and while providing regular cash flow to participants, it will also allow tenants to be protected from shocks in the rental market even if their savings rates are low.”

News Source: 12punto