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| IMPORTANT ISSUES WHILE BUYING BUYING PROPERTY? |
a) OUTSTANDING TAC DEBTS OF BUYING PROPERTY
Especially people who purchase second hand real estate should search whether or not the real estates tax for previous years are paid, in other words, it useful to search whether or not the real estate has real estate tax debt. The practical method is to check the sellers invoices and even for precautionary reasons taking and saving their copies.
According to the last paragraph of the 30th article of Real Estate Tax Law; for the real estate which is subject of the sale, if there are any unpaid income taxes for the current and previous years, the buyer and seller will have joint liability, in other words successive liability, for this debt. Therefore, newly purchased houses all accumulated previous real estate debt can be collected from the new owner. The person who purchases the real estate, later on can collect the money he paid for the previous years real estate taxes from the earlier owner with an interest rate.
b) PRICE OF THE REAL ESTATE IN DEED OFFICE
The real estates price stated at title deed is important for some reasons.
1-In terms of Income Tax
If the purchased real estates are resold within five years beginning from purchase date and profit is made out of this transaction, that amount has to be reported as Value Increase Profit and its Income Tax has to be paid (GVK Repeated Art. 80/6)
People who may sell the real estate they purchase within five years, if they make purchase on low prices they may encounter with problems. Those who declare low prices for the real estates they purchase at the title deed, in case they sell that real estate within five years, the profit may appear higher than the real one. This profit has to be reported and tax may have to be paid for it.
2- In terms of Charges
When calculating the value of title deed charges of real estate which is subject of the purchase-sell activity (the value which title deed fee is based on), among the tax value and declared value of the real estate by the buyer the higher one will be used.
The tax value is the lowest tax value which is determined according to the 29th article of the Real Estate Law and set the real estate tax.
This value is calculated as follows; for the year when the real estate is purchased or every four years following the year when valuation is conducted, it is increased in an amount which is equal to half of revaluation ratio determined according to Tax Procedural Law for the previous year.
During the purchase-sale both the buyer and seller have to pay separately title deed fee equal to 15 %0.
3- Property tax declaration
People who purchase a real estate, until the end of the year when the purchase made, for example those who purchase in 2007 until 31 December 2007 they have submit Real Estate Tax Declaration to the authorized municipality. If the real estate is purchased within the last three months of the budget year (for example after 1 October 2007), the real estate tax declaration has to be submitted within three months from the purchase date of the real estate (EVK Art. 23).
Real Estate tax will be paid beginning in 2008. The tax for the year when the real estate is purchased will be paid by the seller.
4- The Real Estate Purchased for Spouse and Child
If the real estate is purchased on the name of spouse or child, only in case where the price is paid by the householder a gratuitous transfer can be possible. This will be subject to inheritance and succession tax. Spouse or child will have to submit declaration and pay 5-15 % inheritance and succession tax. But, if the householder give money paid for the real estate as a debt to the spouse or child, no taxation will be necessary.
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