Turkish Real Estate Stocks Fall After Simsek Pledges Wider Taxes

Turkish real estate stocks fell in Istanbul after Finance Minister Mehmet Simsek said the government will broaden capital-gains taxes on real estate sales.

The Borsa Istanbul Real Estate sub-index fell as much as 1.7 percent in Istanbul. Emlak Konut Gayrimenkul Yatirim Ortakligi AS, the largest listed real estate company by market value, fell 0.7 percent to a one-week low. The benchmark Borsa Istanbul 100 Index was little changed.

Turkish home sellers will be taxed on capital gains from property “if you hold it for a year or a thousand years,” Simsek said in interview in London yesterday. He didn’t specify a rate or a time frame for the new levy, part of a wider package of tax changes. Turkey currently applies capital-gains taxes only to so-called “flippers,” people or companies who buy a property and then sell it within five years.

“Any further real estate taxes could curb investor residential demand, and if this happens, then this would break the sentiment towards REIC shares,” Bertug Tuzun, an analyst at Ak Yatirim in Istanbul said in an e-mailed note.

Turkish real estate companies have lagged behind the broader market this year, gaining 19 percent, compared with a 25 percent increase for the benchmark Borsa Istanbul 100 Index.

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