Foreign nationals purchasing real estate in Türkiye are often surprised when they are advised during the title deed transfer process to declare a sales price lower than the actual purchase amount.
In many transactions, buyers hear suggestions such as:
“Let us declare a lower value at the Land Registry to reduce taxes.”
For foreign investors unfamiliar with the Turkish real estate market, this raises immediate legal concerns and confusion.
Is this legal?
Is this considered fraud?
Should you accept it?
What are the risks?
This article explains why such practices have historically existed in Türkiye, the applicable legal framework, and the risks for foreign investors particularly those applying for residence permits or citizenship by investment.
AI-Powered Title Deed Audits: The MEVA System
The Ministry of Treasury and Finance is now conducting retrospective audits of title deed transactions from the last five years using an artificial intelligence system called MEVA (Spatial Data Analysis System). By cross-referencing listing websites, bank records, and Land Registry data, the system identifies transactions declared below market value and demands unpaid title deed fees along with substantial tax penalties.
How the System Works: The AI determines a "minimum required value" by comparing precedent property listings, bank loan amounts, and regional valuation data.
Current Audits: Transactions over the past five years that were declared at the municipal "base rate" (rayiç bedel) or below actual value are under intense scrutiny.
Detection and Results: If a significant gap is found between the declared value and the actual market value, both the buyer and the seller are issued penalties for underpaid fees and taxes.
Legal and Financial Sanctions (2026)
Tax Loss Penalty:Underpaid fees are collected alongside high-rate tax loss penalties as of 2026.
Invitation to Explanation:Files flagged as "risky" by the system receive an "invitation to explanation" (izaha davet) letter. Failure to respond can result in even heavier tiered penalties.
Legal Consequences:Beyond taxes, declaring a low value can lead to significant loss of rights in future private lawsuits (e.g., unjust enrichment claims) between the parties.
The Burden of Proof
However, from a legal standpoint, it must be noted that title deed records are considered the primary basis. Under the principle of "the burden of proof lies with the claimant," if the administration, namely the authorised bodies of the Turkish State, mostly the tax office, claims otherwise, the obligation to prove that the declared value does not reflect the truth rests with the administration itself, rather than the taxpayer.
Why Is the Declared Title Deed Value Sometimes Lower Than the Actual Price?
In Türkiye, the title deed transfer tax is calculated as:
4% of the declared sales price
Pursuant to:
Articles 57 and 58 of the Fees Law No. 492 (Harçlar Kanunu)
This 4% transfer fee is typically shared equally between:
Buyer (2%)
Seller (2%)
Because the tax is calculated based on the declared value at the Land Registry, parties sometimes agree to declare a value closer to:
The municipal assessed value
rather thanThe actual market purchase price
Historically, this practice has developed as a market habit intended to reduce:
Transfer taxes
Future capital gains tax exposure
A Cultural and Historical Practice Does Not Remove Legal Risk
Foreign buyers must understand an important nuance.
Yes, it is widely known that in practice:
Real estate sales have historically been declared at values lower than the actual transaction price.
However:
This does not make the practice risk free
Nor does it make it fully compliant with tax law
The declared value at the Land Registry becomes the legally binding reference for:
Transfer tax
Capital gains tax
Insurance coverage
Pre-emption (right of first refusal) disputes
Inheritance related litigation
Allegations of simulated transactions (muvazaa)
Legal Consequences Under Turkish Law
If the declared title deed value is found to be inconsistent with the actual transaction value, the tax authorities may initiate an assessment under:
Tax Procedure Law No. 213 (Vergi Usul Kanunu)
Possible consequences include:
Additional transfer tax assessment
Administrative tax penalties
Late payment interest
Capital gains tax reassessment for the seller
In certain cases:
Banks providing mortgage financing may report inconsistencies between loan appraisal reports and declared sale values
Additional Risk for Foreign Buyers Seeking Citizenship
Foreign nationals purchasing property in Türkiye for:
Residence permit eligibility
Turkish citizenship by investment
face additional scrutiny.
If it is determined that:
The declared value at the Land Registry does not reflect the actual investment amount
this may lead to:
Rejection of the citizenship application
Revocation of granted citizenship
particularly under regulations governing investment based acquisition of nationality.
Other Legal and Financial Risks
Declaring a lower title deed value may also result in:
Insurance Issues
Property insurance policies are typically based on the registered value.
In case of damage or total loss:
The insurance provider may refuse full compensation.
Loan and Mortgage Issues
Banks rely on expert valuation reports.
A discrepancy between declared value and appraisal may:
Affect loan eligibility
Reduce approved financing limits
Pre-emption Rights
In co ownership disputes:
Third parties exercising pre-emption rights may acquire the property based on the registered value.
If the registered value is artificially low, the buyer may suffer financial loss.
Can the Declared Value Be Corrected Later?
Once the title deed transfer has been completed:
The declared sale price cannot be amended at the Land Registry.
However:
Parties may apply to the tax office through a voluntary disclosure mechanism to pay the under declared fees.
This process may mitigate further penalties but does not eliminate legal exposure entirely.
What Should Foreign Investors Do?
Foreign buyers should not treat this issue as a mere administrative formality.
While the practice has historically existed in the Turkish real estate market, it carries:
Tax implications
Legal risk
Immigration consequences
Each transaction should be evaluated individually.
At Bayraktar Attorneys, we advise foreign clients on:
Declared title deed value strategies
Tax compliance risks
Citizenship investment requirements
Legal implications of undervaluation
Consulting legal counsel prior to transfer may prevent future financial or legal complications.
Conclusion
Declaring a lower sales value at the Land Registry may appear advantageous in the short term. However, it may expose both buyer and seller to administrative penalties and legal disputes.
Foreign investors should carefully evaluate the implications and seek professional legal advice before proceeding with title deed declarations.
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