In order not to suffer from any loss of rights, it is required to make a timely appeal in the event that the notified value of the residential property does not correspond to the real value and also file lawsuits in relation to both the value and the tax before administrative courts and tax courts.

Esteemed Fortune readers,

In this article, I would like to share with you my views on the publicly-debated Valuable Residential Property Tax.

A new tax called the Valuable Residential Property Tax has made its way into our lives through a regulation under the Real Estate Tax Law. This regulation stipulated that the immovable residential property, whose building tax value forming the basis of Real Estate Tax or value ascertained by the General Directorate of Land Registry and Cadastre is equal to or more than TL 5,000,000 be subject to "Valuable Residential Property Tax". Therefore, immovable property other than residential property is exempted from this tax.

Accordingly, a Valuable Residential Property Tax at a rate of 3 per thousand if the value in question is between TL 5,000,000 and TL 7,500,000, 6 per thousand if it is between TL 7,500,001 and TL 10,000,000 and 1 percent if it is above TL 10,000,000 will be declared to the authorized tax office at the place of the real estate until the end of February 20, and the calculated tax will be paid in two equal installments in February and August.

The Valuable Residential Property Tax is not a one-time tax but will be paid annually for as long as the residential property physically exists. It would not qualify as exaggeration to say that the regulation, in general, contains elements contrary to the principles of equality, universality, ability to pay and property rights provided in the Constitution. 

Examples include double taxation by charging both Real Estate Tax and Valuable Residential Property Tax on the same residence, tax exemption for persons that have multiple residences with a value of less than TL 5 million each but enjoy a total residence value in excess of TL 5 million, the provision that a person who owns fifty percent of a residence worth TL 5 million will not be paying tax over a value of TL 2.5 million but over the full value of the residence, tax exemption for workplaces at a same value of TL 5 million or more.

Furthermore, imposing this tax for as long as the residential property physically exists turns the Valuable Residential Property Tax into a kind of capital tax. However, due to the lack of negative revaluation during periods of significant declines in residential prices, tax rates of 3 and 6 per thousand and 1 percent will correspond to higher rates than actual value. The service of notifications to real estate owners on the value of their residential property started immediately after the entry into force of the regulation.

However, this process led to inexplicable cases such as the service of multiple notifications for the same residential property as well as the service of some notifications to tenants rather than the property owners.

I believe the notifications on the value of residences should absolutely be appealed and, if such appeal results in a negative decision, the issue should be taken to court. In addition, if the regulation is cancelled by the Constitutional Court for any reason, it will be possible for those who submitted the February declaration with a reservation to get a refund for the taxes they previously paid.

Although it is stated that the publicly-debated regulation would be postponed for one year, the failure to take action so far requires resolving the matter through litigation.