A new era for title deed fees! A proposal for a reduction will be submitted

It is stated that changes will be made to title deed fee rates for real estate transactions as part of the economic omnibus bill proposal that will come to the agenda with the reopening of Parliament. Accordingly, a proposal will be submitted to reduce title deed fee rates.

Under normal circumstances, the fee amount to be paid for real estate transactions is determined based on the declared value set by municipalities. However, there can be significant differences between the municipality's valuation and the actual value of the real estate. It is planned that a clause regarding the elimination of the informality that occurs here will be included in the omnibus bill proposal. According to the regulation being focused on, the title deed fee rates collected from the buyer and seller will be reduced.

So, how are title deed fees determined in the current system? How much is the title deed fee for a 1 million TL land sale? How much should the reduction in title deed fees be?

HOW ARE TITLE DEED FEES DETERMINED?

Real Estate Expert Mustafa Hakan Özelmacıklı, who explained the points of curiosity regarding the subject to milliyet.com.tr, made the following statements:

“On the real estate side, title deed fees are collected based on the declared value. The minimum amount of the declared value is the municipality's fair market value. It is requested that sales be shown not at the municipality's fair value, but at the actual purchase and sale price. The fee rate is collected separately from the buyer and seller at a rate of 20 per thousand over the sale price. In other words, there is a title deed fee that we can call 2 percent from the buyer and 2 percent from the seller, totaling 4 percent. When paying title deed fees, depending on the agreement between the parties, the fee can be paid solely by the buyer, the seller, or both jointly. In order for the buyer and seller not to engage in a penalized transaction, they must declare the actual purchase and sale price. This value to be declared must not be lower than the property tax value; it must be declared at least at this level.

IS THERE A PENALTY FOR TITLE DEED FEES PAID BELOW THE VALUE?

If the value forming the basis of the title deed transaction does not reflect the truth, and an amount less than the property tax value is paid, the underpaid fee can be collected from the buyer and seller under the name of a 25 percent tax loss penalty. People who cause this fee to be lost by declaring it incompletely can submit a repentance petition regarding this themselves; in this case, they can pay the under-declared amount again.

‘NEARLY 2 MILLION SALES TRANSACTIONS IN THE FIRST 8 MONTHS’

A significant number of transactions are carried out in title deed offices. When we look at the sales figures for the first 8 months of the year, 1 million 770 thousand sales transactions took place. Almost 48 billion TL of title deed fee revenues came from sales. Earnings from other transactions are at the level of 2.5 billion TL. Title deed fee revenues are an important source of income for the state. In the first 8 months, there was a title deed fee revenue of 50 billion 536 million TL.

‘THERE IS A SERIOUS DIFFERENCE BETWEEN THE ACTUAL SALE PRICE AND THE PRICE SHOWN ON THE TITLE DEED’

The values shown here actually appear low at different rates depending on the type of real estate. In land and plots, there is a difference of at least 20 times between the actual sale price and the price shown on the title deed. In apartment sales, this difference is over 5 times. In mortgage-backed apartment sales, we can say it is on the scale of approximately 2.5 times. We need the actual value part here.

HOW WILL THE NEW REGULATION BE?

The regulation planned to be made had been attempted to be implemented a few times before. One of these was to make a valuation report mandatory for all real estate sales. It was returned from Parliament about 3.5 years ago, and a mass valuation system could not be established.

A different study was proposed in the General Directorate of Land Registry and Cadastre's Strategic Action Plan. It was proposed to establish a real estate value information center integrated into the land registry and cadastre information system. The proposal was that real estate value changes should be tracked with this real estate value information center, prices realized in title deed transactions should be recorded, this should form a basis for expert reports of courts, and it should form a basis for determining the purchase and sale value in real estate and for correcting title deed fees and property taxes in the taxation system.

‘THE GOAL IS TO INCREASE FEE REVENUES’

In land registry and cadastre legislation, it is aimed to increase fee revenues through mass valuation or individual valuation methods.

There is a need for this in terms of using secure money transfer systems for citizens in title deeds. There has been a significant problem in Turkey regarding value increase gains for a long time. There is a need for a value amnesty here. It is not yet possible for us to reach the opportunity to show the actual value in the title deed without a value amnesty. The high rate of title deed fees creates a complex situation for buyers and sellers.

‘THE PROPERTY TAX DECLARED VALUE IN MUNICIPALITIES IS NOT A VALUE THAT FORMS THE BASIS FOR THE TITLE DEED’

The property tax declared value seen in municipalities is not a value that forms the basis for the title deed. There is a value calculation method here that comes from the property tax law. These are values calculated by applying depreciation to unit square meter construction costs over street and avenue fair values. The property tax value is quite far from this value. Within the framework of the legal regulation to be made, property taxes can also be ensured to be recalculated correctly.

HOW MUCH TITLE DEED FEE DO THE PARTIES PAY FOR A 1 MILLION TL LAND SALE?

In a sale shown over 1 million TL, there is a total title deed fee of 40 thousand TL, 20 thousand TL on behalf of the buyer and 20 thousand TL on behalf of the seller. To this is added a fee called the revolving fund fee, which we call the fee for title deed transactions according to local coefficients. This fee has a coefficient that varies according to cities.

THE MINISTRY OF FINANCE HAS BROUGHT THE REAL ESTATE SECTOR UNDER CONTROL

We also hear about some audits conducted by the Ministry of Treasury and Finance in various sectors. Transactions such as jewelry, vehicle sales, real estate, and yacht sales are under surveillance. I think there is a need to regulate the system accordingly rather than placing the responsibility for taxation over the actual value in real estate on the citizen. Otherwise, losses and evasions can occur in many title deed transactions today.

A database will be created that records the current values of real estate for real estate valuation in coordination with relevant institutions, and studies will be carried out for the implementation of computer-aided mass valuation methods.

HOW MUCH SHOULD TITLE DEED FEES BE REDUCED?

At this point, if the title deed fee were pulled to the 1 percent level, making it 2 percent in total for the buyer and seller, and if a declaration amnesty were introduced for real estate sales for a while, and this declaration amnesty provided the opportunity to benefit from the declaration amnesty at least until the first sale made from the date the regulation is issued, I evaluate that we would get quite close to the issue of actual value in real estate as a sector.”

News Source: 12punto