The real estate market is one of the most important sectors of Turkey’s economy. Any changes in real estate purchase or foreigner acquisition have a direct effect on the Turkish economy. Therefore, any tax increase related to real estate purchases is closely examined by market players.
Real property tax has been dramatically increased for 2014 and thus house, shop, market or landowners are at risk of paying high amounts of real estate tax. The reason for such increase is that ‘land m2 fees’ were re-evaluated for 2014 and, especially in Istanbul, real property tax was increased by between 100-200% and even 500-1,000% in some provinces and districts in Turkey.
The abovementioned real estate tax increase affects around 23 million people — almost every family in Turkey. It should be noted that it is not required to be a ‘land’-owner to be affected from the increase. Even an apartment owner will pay higher tax as the real property value of an apartment is determined by adding land value to the building value. Therefore, an increase in land value increases the real property tax amount.
Real property tax rates vary depending on the qualification (i.e., residence building, non-residence building, land, field) and location (i.e., whether or not within the metropolitan municipality) of the real property.
Ratings for Turkish banks revised
Rating revisions on 11 Turkish banks have been carried out by Moody’s, stating an increasingly challenging operating environment, which is expected to continue for the next 12-18 months.
“The two key drivers of the ratings are pressures on the standalone credit strength of some of the institutions and Moody’s re-assessment of the level of systemic support it believes should be incorporated into some of the banks’ senior ratings,” the agency said in a statement on the 3rd June.
The 11 banks are as follows: Akbank T.A.S., Asya Participation Bank, Denizbank, GarantiBank, Isbank, Şekerbank, Türk Ekonomi Bankası, Vakifbank, Yapı Kredi, Halkbank and Ziraat Bankasi.
Moody’s estimated that the tough environment for lenders in Turkey will continue for the next 12-18 months due to a slowdown in real GDP growth, higher funding costs and a climate of uncertainty affecting the banks.
Ali Ceylan is a partner at Baspinar & Partners Law Firm. He can be contacted at
[email protected]
.