Türkisch 
Englisch 
Russisch 
Understating the sale price at the land registry is the concealment of the true sale price in a property transfer transaction and having it registered in the land registry at a lower amount. This practice, resorted to most often in order to save on the title deed fee or to avoid the capital gains tax, gives rise to consequences that are difficult to remedy, such as penalised tax assessment, annulment of the title deed, annulment of the disposition and loss of ownership through the pre-emption right.
This guide comprehensively addresses the tax-related, legal and criminal dimensions of understating the price, frequently encountered in the Antalya real estate market, in the light of current Court of Cassation decisions and the provisions of the Law on Fees, the Tax Procedure Law and the Enforcement and Bankruptcy Law.
What Does Understating the Sale Price at the Land Registry Mean?
Understating the sale price at the land registry is the registration by the parties, in a property sale-purchase, of a figure below the true transaction price in the land registry. This practice is characterised in the Turkish legal system as a collusive transaction and gives rise to serious consequences in many areas, from tax law to the law of obligations, and from enforcement-bankruptcy law to inheritance law. One of the fundamental principles of law, the rule that "the true nature is essential in taxation and in legal relations," allows such simulated transactions to be identified retrospectively and made subject to sanctions.
Pursuant to Article 3 of Law No. 213, the Tax Procedure Law (Vergi Usul Kanunu), the true nature of the event giving rise to the tax and of the transactions relating to that event is essential. Whatever the parties declare at the land registry, the administration and the judiciary are empowered to investigate and determine the true transaction price.
Tax Sanctions and Supplementary Title Deed Fee
The basis of the financial obligations in property sale transactions is Law No. 492, the Law on Fees (Harçlar Kanunu). Pursuant to Article 63 of the Law, the title deed fee is calculated on the true transfer price declared, which may not be less than the property tax value. A common misconception in practice is the belief that declaring the municipal market value (the property tax value) fulfils all legal responsibility. Yet the property tax value is merely a lower limit; the actual tax base is the true transfer price.
Ex Officio and Supplementary Assessment
If the difference between the declared price and the true price is subsequently discovered, the administration's power to intervene arises. Through supplementary or ex officio assessment, the deficient fee is collected together with default interest and a tax-loss penalty. The taxpayer's defence of "I made a mistake" carries no legal validity.
Konya Regional Administrative Court, 2nd Tax Litigation Chamber, decision dated 13.04.2017, Merits No. 2016/2750, Decision No. 2017/922Where it is established, after the transaction carried out at the land registry, that the fee was paid on a price lower than the property tax value, or that the declared transfer price does not reflect the true situation, the fee corresponding to the difference is assessed supplementarily or ex officio. In the specific case, against the sale price shown as 37,500 TL at the land registry, it was established that a 75,000 TL housing loan was taken out by the buyer and that the property's value was appraised at 100,000 TL in the bank's expert report, and the penalised assessment was found to be in accordance with the law.
The Tax-Loss Penalty and the Role of Bank Records
Paying a deficient fee also gives rise to the offence of tax loss. Pursuant to the Tax Procedure Law, a tax-loss penalty is imposed at the rate of one times the amount of the deficiently paid fee, and in some cases, depending on the nature of the transaction, three times. Today, the Revenue Administration audits property sales not through land registry records but in a manner integrated with the banking system.
Especially in purchases made using a housing loan, the expert reports drawn up by banks and the loan amounts disbursed are accepted as the most concrete evidence of the true sale price. A loan amount higher than the title deed price is a direct trigger of a tax audit; the administration instantly detects this discrepancy through automatic audit systems.
How Much Is the Penalty for Understating at the Land Registry? (2026)
There is no fixed monetary penalty for understating the sale price at the land registry; the sanction consists of the supplementary collection of the deficiently paid title deed fee and the associated tax-loss penalty and default interest. In a title deed transfer, the fee is calculated on the true sale price at the rate of 2 per cent (per mille 20) separately from the buyer and the seller (a total of 4 per cent / per mille 40), and the tax base may not be below the property tax value.
When an understated declaration is detected, the tax office makes a supplementary or ex officio assessment: the deficient fee is collected, and on top of it a tax-loss penalty equal to one times the deficient fee (VUK Art. 344) and default interest are added. The following table exemplifies the additional burden that arises where a property with a true price of 5,000,000 TL is shown as 2,000,000 TL.
| Item | Amount (Example) |
|---|---|
| True sale price | 5,000,000 TL |
| Price shown at the land registry | 2,000,000 TL |
| Undeclared tax-base difference | 3,000,000 TL |
| Deficient title deed fee (per mille 40) | 120,000 TL |
| Tax-loss penalty (1 times) | 120,000 TL |
| Approximate total additional burden (+ default interest) | 240,000 TL and above |
The figures are for illustration only; the actual amount varies according to the tax-base difference, the date of detection and the accruing default interest.
Who Pays the Penalty for Understating at the Land Registry?
The buyer and seller are jointly and severally (together) liable for the title deed fee (Law on Fees Art. 63). For this reason, the deficient fee and the tax-loss penalty may be directed by the administration to either of the parties or to both of them at once. Although in practice the fee is mostly paid by the buyer, the seller may also be pursued due to the joint and several liability.
An agreement made between the parties among themselves as to "who will pay the fee" does not bind the tax office; the administration, relying on joint and several liability, may claim its receivable from whichever party it wishes.
The Presumption of Collusion and the Loss of Ownership Security
Understating the price is not merely a tax matter, but also an ownership risk that may lead to the transaction being deemed invalid on grounds of collusion (simulation). Within the framework of Article 19 of the Turkish Code of Obligations and Article 1024 of the Turkish Civil Code, a sale price shown far below the true value constitutes a presumption strengthening the claim that the registration is wrongful.
Court of Cassation (Yargıtay), 1st Civil Chamber, judgment dated 24.05.2022, Merits No. 2021/10070, Decision No. 2022/4076The fact that the transfer price of the property is far below its true value is a presumption strengthening the claim that the registration is wrongful. Where there is an excessive difference between the true value ascertained in the expert report and the price shown at the land registry, and the buyer cannot prove how the price was paid through the bank channel, the claim of good faith may be rejected pursuant to TMK Art. 1024/1.
Abuse of the Power of Attorney and Attorney-Buyer Collaboration
The abuse of the power of attorney in property sales is one of the dispute areas that most frequently intersects with the practice of understating the price. Within the framework of the Turkish Code of Obligations, the attorney has a duty of loyalty and care towards the principal. The attorney's transferring the property at a price far below its true value, relying on the authority to "sell at any price they wish," is a clear breach of this duty.
If the buyer knows or is in a position to know the true value of the property and, despite this, acquires the property at a low price in collaboration with the attorney, this situation is characterised as attorney-buyer collaboration (collusion and collaboration). A precedent-setting decision of the Antalya Regional Court of Justice sets out this legal framework clearly.
Antalya Regional Court of Justice, 1st Civil Chamber, judgment dated 08.05.2017, Merits No. 2017/223, Decision No. 2017/278It was concluded that the attorney, acting contrary to the duty of loyalty, transferred the property at a price far below its true value, and that the buyer also acted with knowledge of this situation. Denying the buyer's good faith, it was ruled that the difference between the true value of the property and the low price at the land registry be paid as compensation.
The Pre-emption (Şufa) Right: The Greatest Risk for the Buyer
In properties subject to the shared-ownership regime, when a shareholder sells their own share to a third person, a statutory pre-emption (şufa) right arises for the other shareholders pursuant to Article 732 of the Turkish Civil Code. This right grants the shareholders the power to purchase the sold share first, on the same terms and at the same price. Understating the price at the land registry turns into a legal trap that offers the shareholder holding the pre-emption right the opportunity to acquire the property far below its true value.
According to the settled case law of the Court of Cassation, the buyer cannot defend by saying "I actually paid a higher price, I only understated it to avoid tax." A person cannot derive a beneficial result, against third parties, from their own collusive transaction. This risk is especially high in the co-owned properties located in the tourism area and coastal strip of Antalya; seasonal price fluctuations render the difference between the true price and the price at the land registry visible.
Court of Cassation (Yargıtay), 14th Civil Chamber, judgment dated 28.11.2019, Merits No. 2019/4471, Decision No. 2019/7987The shareholder exercising the pre-emption right, when wishing to purchase this share, must deposit the pre-emption price consisting of the sale price shown at the land registry plus the total of the fees and costs paid by the defendant. Since the defendant is a party to the sale contract, they cannot claim that the price part of this contract is collusive or that the true sale price is above the amount at the land registry.
The buyer's subsequent application to the tax office with a voluntary-disclosure petition and payment of the difference fee on the true price also does not change the result. The Court of Cassation consistently emphasises that such subsequent corrections do not affect the result in the pre-emption action. Therefore, the low price shown at the land registry means a vested right for the holder of the pre-emption right, and the loss of ownership for the buyer.
Annulment of the Disposition and Creditors' Rights
Understating the sale price also creates serious risk vis-à-vis the seller's creditors. The actions for annulment of the disposition regulated in Article 277 et seq. of the Enforcement and Bankruptcy Law aim to prevent the debtor from concealing assets from their creditors by reducing their estate. The evident difference between the sale price at the land registry and the true value of the property is one of the strongest pieces of evidence in this action.
Pursuant to İİK Art. 278/3-2, the debtor's acceptance, at the time the contract was made, of a very low price as consideration relative to the value of what they themselves gave, is accepted as a presumption that the disposition is in the nature of a gift. In this case, the transaction may be made subject to annulment regardless of whether the buyer is in good faith.
Court of Cassation (Yargıtay), 17th Civil Chamber, judgment dated 15.04.2019, Merits No. 2016/18288, Decision No. 2019/4776Despite the title deed price of the property at issue being shown as 30,000 TL, its true value was established by expert examination to be 158,000 TL. It was established that the excessive difference pointed to a collusive transaction carried out with the intent to conceal assets from creditors, and that there was no transfer or wire payment relating to the payment in the bank account movements, and annulment of the disposition was ordered.
The Presumption of Acquaintance and Transfers Between Relatives
Low-priced transfers made to persons who know or should know the debtor's financial situation are accepted as a presumption of the intent to cause loss to the creditor. Ties such as kinship, neighbourhood or commercial partnership are used to prove that the transaction is not an ordinary sale made to a good-faith third person. The Court of Cassation accepts that in low-priced transfers made to the debtor's brother-in-law, close relative or commercial partner, there is a statutory presumption that the buyer knew the seller's financial situation.
Testator's Collusion (Muris Muvazaası) and Heirs' Actions
Understating the price at the land registry triggers the risk of testator's collusion (muris muvazaası), which leads to major disputes among the heirs in the event of the seller's death. The heirs may file an action for annulment of the title deed and re-registration, asserting that the transaction was in fact not a sale but a concealed gift (donation) infringing their reserved shares. In the case law of the Court of Cassation, the excessive difference between the sale price and the market value is one of the strongest presumptions of collusion. If the buyer cannot prove, by bank records or written evidence, that they made a payment beyond the low price at the land registry, they face the risk of losing the property entirely.
Capital Gains Tax: The Hidden Trap
The most insidious financial risk of understating the price at the land registry is the Capital Gains Tax that emerges at the stage of the property being sold again in the future. Pursuant to the repeated Article 80 of the Income Tax Law, gains arising from the disposal of immovables within five years starting from the date of acquisition are subject to this tax, and the tax is calculated on the difference between the acquisition price and the sale price.
If a person shows at the land registry as 300,000 TL a property for which they in fact paid 1,000,000 TL, then when they sell this property three years later for 1,500,000 TL, their gain will appear in the official records not as 500,000 TL but as 1,200,000 TL. Very high rates of income tax will be paid on the 900,000 TL fictitious profit difference. The choice made at the outset to save on the title deed fee results, a few years later, in paying many times the fee as tax.
The buyer's defence of "I actually bought it at a higher price" is not accepted, because in terms of tax law they are bound by their declaration in the title deed. There is no possibility of benefiting from one's own collusion.
Comparison of the Risks of Understating the Price
The following table summarises the principal risks created by understating the sale price at the land registry, their legal bases and the possible sanctions.
| Type of Risk | Legal Basis | Possible Sanction / Consequence |
|---|---|---|
| Deficient Title Deed Fee | Law on Fees No. 492, Art. 63 | Difference fee + default interest + tax-loss penalty of up to one times |
| Tax Loss | Tax Procedure Law, Arts. 3, 341, 344 | Ex officio/supplementary assessment; penalty may rise to three times in some cases |
| Pre-emption (Şufa) Right | TMK Arts. 732-734 | Transfer of the property to the shareholder at the low price at the land registry |
| Annulment of the Disposition | İİK Arts. 277, 278/3-2, 280 | Annulment of the transaction, attachment and sale of the property |
| Testator's Collusion | TMK Art. 1024, Code of Obligations Art. 19 | Annulment of the title deed, return of ownership to the heirs |
| Capital Gains | Income Tax Law repeated Art. 80 | High-rate income tax on a sale within 5 years |
| Abuse of the Power of Attorney | Code of Obligations power-of-attorney provisions, TMK 1024 | The registration being deemed wrongful, compensation |
Ways of Protection and Legal Advice
The first condition for ensuring ownership security in property sale-purchase is that the transaction be conducted in accordance with the rule of good faith and in a transparent manner. The consistency between the declaration at the land registry and the actual payment forms the strongest armour against future claims of collusion and tax audits.
The sale price must certainly be transferred through the bank channel; the block, parcel and independent-section information of the property, together with the phrase "sale price," should be written in the receipt description. Claims of cash payment are difficult to prove before the courts and create suspicion of collusion. It is important for security that, before the application to be made to the Antalya Land Registry Directorate, all payment documents be completed and the bank receipts be placed in the file.
Where a transaction has previously been carried out with the price understated, it is possible to make a declaration to the tax office within the framework of the voluntary disclosure and correction provisions of the Tax Procedure Law and to pay the deficient fee. However, if this correction is made after an action or a tax audit has begun, the possibility of escaping criminal sanctions may disappear. For this reason, when a problematic transaction is noticed, it is critical to obtain legal support without wasting time.
Frequently Asked Questions About Understating the Sale Price at the Land Registry
If the title deed fee is paid on the property tax value, does legal responsibility end?
No. Pursuant to Law on Fees Art. 63, the property tax value is merely a lower limit; the actual tax base is the true transfer price. If the true price is higher than the property tax value, the title deed fee must be calculated on this true price. Otherwise, the administration collects the difference together with default interest and a tax-loss penalty.
What happens if, in a property bought with a bank loan, the loan amount is higher than the title deed price?
This situation constitutes a direct ground for a tax audit. The bank's expert report and the loan amount disbursed are accepted as the most concrete evidence of the true value of the property. The discrepancy between the title deed price and the loan amount is, for the Revenue Administration, in the nature of an automatic report, and a penalised assessment is made.
Can the shareholder holding the pre-emption right purchase at the low price shown at the land registry?
Yes. The shareholder exercising the pre-emption right purchases the share by depositing the total of the price at the land registry plus the fees and costs. The buyer cannot defend by saying "I actually paid a higher price"; because they cannot derive a beneficial result by relying on their own collusion. This means the complete loss of ownership for the buyer who understated the price at the land registry.
What can the seller's creditors do against a low-priced title deed transfer?
Pursuant to Article 277 et seq. of the Enforcement and Bankruptcy Law, they may file an action for annulment of the disposition. Pursuant to İİK Art. 278/3-2, a transfer made at an excessively low price relative to the market value is deemed to be in the nature of a gift and is annulled. In this action, the buyer's claim of good faith is, as a rule, not heard; the property is attached and sold to satisfy the creditors' receivable.
Can the heirs have a low-priced title deed transfer annulled?
Yes. The reserved-share heirs may file an action for annulment of the title deed and re-registration based on testator's collusion, asserting that the transaction was in fact a concealed gift. The excessive difference between the market value and the title deed price is a strong presumption of collusion; if the buyer cannot prove the true payment by bank records, the property is returned to the heirs.
After the price has been understated, is correction (voluntary disclosure) possible?
Before a tax audit or an action begins, it is possible to apply to the tax office within the framework of the voluntary disclosure and correction provisions of the Tax Procedure Law and to pay the deficient fee together with default interest. However, corrections made after an audit or an action has begun do not save one from the tax-loss penalty and are also not effective on the result of private-law actions such as pre-emption or annulment of the disposition.
What kind of tax does the understated price create when the property is sold a few years later?
Pursuant to the repeated Article 80 of the Income Tax Law, in a sale made within five years, capital gains tax is paid on the difference between the acquisition price and the sale price. Since the understated acquisition price at the land registry will form the basis of the official records, a considerable amount of fictitious profit emerges when selling in the future, and one is obliged to pay high-rate income tax.
How much is the penalty for understating the sale price at the land registry?
Does the buyer or the seller pay the title deed fee penalty?
The general legal framework of the subject is also addressed on the legal process in title deed and property cases page.
The scope of the relevant types of dispute is explained in general terms on the page titled our title deed law work.
