When in Rome do as the Romans do, so the saying goes. Foreign residents in Turkey have chosen to adapt this old adage to their real estate purchases. Turkey's Ministry of Finance has uncovered serious tax evasion infractions involving real estate purchases in several of Turkey's prominent vacation regions. These violations, typically in the form of property undervaluing, totaled nearly 60 percent of all real estate transactions, and approximately YTL 52.1 million in tax revenues were lost as a result, according to a piece published by the Anatolia News Agency. However, when looking at the wider real estate tax evasion problem in Turkey, this is just the tip of the iceberg. “Turkish people do not like to discuss their own mistakes; it is much easier to criticize foreigners,” said Ahmet Rauf Saatçi, CEO of Century 21 Turkey. “Throughout Turkey, foreigners are involved in less than 1 percent of real estate transactions,” Saatçi said. He also emphasized that these tax crimes in Turkey had been due largely to a lack of coordination between Turkish public institutions. “The Office of Land Registry, the Ministry of Finance and the municipalities have communication problems. If you do not report your property to the Ministry of Finance, the Office of the Land Registry will not inform them,” said Saatçi. “The solution lies with the development of the e-state,” he noted. Moreover, Kevin Candaner, the head of Century 21's Bodrum Office, said that foreign clients do not especially demand tax evasion. “These people pay taxes in their own countries regularly, like the Capital Gains Tax for example. However, in Turkey realtors push them to take advantage of loopholes,” Candaner said. Realtors urging clients to take these actions currently do not face any form of legal ramification since technically, they are not violating the law. One may have a valuable lot, but a realtor cannot be blamed if he declares the price of your property over the current market price, which is typically calculated as an average of regional prices, said real estate attorney Ekrem Sarı. However, the government is poised to tighten controls on property taxation with the hope of curtailing the current problems.
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