Capital gains tax on property sales

Most people would declare a lower price in order to pay less in transfer tax. This practice is now a thing of the past because a new regulation has been introduced to stop tax losses from low purchase price declarations. According to the new regulation, the price to be declared cannot be less than the value of the property as assessed by the local municipality.

What is the impact of the regulation?

The impact of this regulation will really hit those who declared lower prices when buying their properties.

If I may give an example with figures it will provide a clearer picture: Mr. Investor purchased a property for TL 200,000 but declared the value as TL 25,000 at the time of purchase in order to pay less in transfer tax. Three years later Mr. Investor wants to sell his property, and it is now worth TL 450,000. Both the buyer and the seller agree on the sales price and also agree on to declare the sales price as TL 30,000. The seller and buyer meet at the land registry office, submit the sales agreement to the officer and the officer says, “Oops! The sales price appears incorrect to me.”

Source: Today's Zaman