Real Estate in Turkey: Transition to Real Market Values in Property Deeds

Despite being widely desired for years, several tax reforms in Turkey have still not been fully implemented. One of the most notable among them is the long-discussed transition to declaring real sales prices in property transactions at the land registry.

Although both the Ministry of Finance and the Land Registry Administration have invested serious effort and resources into this issue, success has remained limited so far. The core of the problem lies not in new developments, but in second-hand property sales.

The real challenge: second-hand property transactions

In branded housing projects, commercial developments, and sales carried out by construction companies, REITs, and real estate investment funds, title deed transactions are generally completed at actual sales values. These entities are subject to VAT refunds and regular scrutiny, leaving little room for underreporting.

The real difficulty arises in informal construction activities and especially in second-hand property sales, where under-declaration has become the norm rather than the exception.

Only one out of five sales reflects the real value

It is estimated that only around 20 percent of property transfers in Turkey are declared at their true market value. The remaining majority are reported at significantly lower figures, often just above the officially determined property tax value.

This situation creates a severe loss of public revenue.

A major source of tax loss

Under-declared property values lead to substantial losses in title deed fees, income tax, corporate tax, VAT, inheritance and transfer tax, and property tax. The primary cause is clear: either incomplete declarations or the complete avoidance of declaring the real transaction value.

The total annual tax loss resulting from this practice is estimated to be between 10 and 15 billion US dollars.

Why has this problem persisted?

The reason is simple and well known: the shared financial interest of buyers and sellers, combined with high transaction taxes.

For example, if a property worth 30 million Turkish lira is transferred at its real value, a total title deed fee of 4 percent—1.2 million lira—must be paid, split equally between buyer and seller. If the same property is declared at 10 million lira, the total fee drops to just 400,000 lira. The incentive to under-declare is obvious.

In addition, if a property is sold within five years of acquisition, the seller may be subject to income tax at rates ranging from 15 to 40 percent. Avoiding this tax is another strong motivation for declaring lower values. VAT considerations further reinforce this behavior.

Unfair competition in the sector

This widespread practice not only fuels informality and tax loss, but also creates unfair competition among developers and real estate companies. Businesses that comply with the rules find themselves at a disadvantage compared to those operating in the grey zone.

The circle is tightening: concrete steps are being taken

The state has recently begun to take more decisive action. A nationwide property valuation system has been introduced, penalties for under-declared title deed fees have been increased to one times the tax loss, and the Spatial Data Analysis System has been put into operation.

In addition, valuation reports prepared by appraisal companies authorized by the Capital Markets Board and the Banking Regulation and Supervision Agency must now be transmitted electronically and free of charge to the General Directorate of Land Registry and Cadastre.

All of these measures point toward a broader restructuring of the property taxation system.

The sector itself supports real-value transactions

Since 2018, major real estate associations such as KONUTDER, GYODER, and İNDER have openly supported transactions based on real market values. Their shared goal is to eliminate tax losses, reduce informality, and put an end to unfair competition by removing the grey areas that have long dominated the sector.

What else should be done?

Transitioning fully to real-value declarations is not easy. For years, this issue has been consciously or unconsciously avoided, allowing a fragile consensus around low declared values to take hold.

Given the state’s growing need for revenue, expanding the taxable base and bringing grey areas under formal control is no longer optional. It is essential for both fiscal sustainability and social fairness.

Under current rules, title deed fees must be calculated based on the declared sale price, provided it is not lower than the property tax value. In practice, however, buyers and sellers continue to declare values close to this minimum threshold, and only a small number of cases are penalized due to technical limitations.

What does the public expect?

There is a clear expectation that title deed fees should be significantly reduced or converted into a fixed amount to ease the psychological and financial resistance to the new system. Another widely supported proposal is a one-time “property value amnesty,” allowing owners to update registered values to current market levels in exchange for a low tax rate of 2–3 percent.

Once such a reset is completed, strict enforcement and serious penalties for under-declaration would become both feasible and socially acceptable.

Final thoughts

Fighting informality, expanding taxable capacity, preventing revenue loss, and ensuring fairness among citizens are no longer matters of choice. Recent steps show that the state is moving in this direction.

However, to truly prevent under-declared property transfers—especially in second-hand sales—two conditions are critical: a substantial reduction in title deed fees and a one-time opportunity to align registered property values with real market prices.

Without these, the grey zone in property taxation will remain difficult to eliminate.

By Abdullah TOLU – Tax Expert (ekonomim.com)
14 January 2026

Keywords: #realestate #propertytax #titledeed #taxreform #realvalue #housingmarket #landregistry #informaleconomy #Turkeyrealestate