Expectations of exorbitant increases in property tax

According to Tax Procedure Law No. 213, tax values for real estate are determined every 4 years by appraisal commissions for the purpose of calculating property taxes under Property Tax Law No. 1319. The work carried out by the appraisal commissions has been completed, and the newly determined tax values have been posted locally. There are quite high increases in the newly determined property tax values. However, the very high inflation experienced in recent years and the rapid increase in real estate values have triggered this situation. 

The increase in the tax value of real estate directly affects not only property tax but also many other public revenues such as inheritance and transfer tax, income tax, value-added tax, and title deed fees.

Specifically regarding inheritance and transfer tax, real estate transferred through gifts, donations, or death is valued not at market value but at tax values and included in the tax base. For this reason, since the tax bases for this tax are quite low, it cannot fulfill its tax functions. We believe that market value should be taken into account instead of tax value for this purpose. 

The tax values determined by the appraisal commissions have remained well below market value for years. Therefore, justice and equality in taxation are being undermined. Luxury properties owned by high-income groups are taxed on very low bases. Furthermore, when assets belonging to high-income groups are transferred through death, very low levels of tax are paid due to valuation problems.

The last paragraph of Article 63 of the Fees Law states that if it is determined that the price declared in the title deed does not reflect the "actual" price, the difference between the declared price and the actual price shall be assessed ex officio. In other words, although the tax value is the basis for the title deed record, the law allows for ex officio assessment if it is determined that the actual transaction price is higher.

Property Tax derives its source from Property Tax Law No. 1319. The tax on residences, which has been discussed recently, is referred to as building tax in the said Law.

Building tax is applied at a rate of 1 per thousand of the tax value for residences, and 2 per thousand of the tax value for other buildings (workplaces, etc.). The President has the authority to reduce these rates by half and increase them up to three times.

Article 29 of the Law states that the tax value to be taken as the basis for tax on buildings shall be determined in two stages;

-First, the square meter value is determined by appraisal commissions for the land on which the building is located, on a street and avenue basis. 

-Then, the construction cost per square meter is determined jointly by the Ministry of Treasury and Finance and the Ministry of Environment, Urbanization and Climate Change.

Finally, the tax value of the building, which forms the basis for the building tax, is calculated by taking into account the square meter, street, and construction quality criteria of the building whose square meter values have been determined as mentioned above. This value is multiplied by the rate of 1 per thousand for residences and 2 per thousand for other buildings to find the building tax amount. This amount is paid in two installments, in May and November.

The issue discussed regarding the property tax increases that have frequently come to the agenda in recent days relates to the determinations for land and plots that will form the basis for the 2026 property tax. Considering that the values of land and plots were last determined in 2021, based on the year 2022, it can be considered reasonable that increases will occur at a rate that will attract public reaction. 

The two components of the building tax, as mentioned above, are land cost and construction cost.  

-According to the Construction Cost Index published by TURKSTAT, while the index for June 2025, which is the most recently published data, was 1883, this index was 297 in June 2021. In other words, the construction cost has increased 6.5 times in four years. 

-According to data from the Endeksa website, while the average land square meter value across Turkey was 6,077 TL in June 2025, the same data was 776 TL in June 2021. This means the land value has increased approximately 8 times. 

As can be seen, in the tax value determinations made every four years, the inflationary environment resulting from the expansionary monetary policy that Turkey experienced in the post-pandemic period with the "nas" (interest-free) economy has caused an extraordinary increase in land values and construction costs. While a 7-8 fold increase in the tax value updates for 2026, which form the basis for the building tax, might be considered a reasonable rate, the fact that citizens' incomes have not increased at this rate could result in the further impoverishment of citizens through building tax.

Essentially, increasing the building tax at exorbitant rates is highly consistent with the government's long-standing tax policy. The AKP's taxation policy is based on not taxing income. Thus, while both the poor and the rich pay taxes in proportion to their assets or expenditures, the way is paved for the wealthy segment to benefit from many tax exemptions and exceptions. 

Another consequence of increasing the tax value that forms the basis for the building tax will be an increase in title deed fees. Title deed fees are calculated based on what is called the fair value, which is essentially the tax value that forms the basis for the building tax. With the increase in tax values that form the basis for the building tax in 2026, there will also be an exorbitant increase in the title deed fees that citizens will pay for real estate transactions.

As of the end of 2024, while the share of building tax within the revenues of local governments of all scales was 2.3%, the share of land and plot tax was 0.76%. In 2022, when the last tax value update was made, these rates were 2.9% and 1%, respectively. While the share of the two taxes in total revenues was 3.9% in 2022, this rate was 3% in 2024, meaning the share of property tax in the local government budget has decreased.