| Ecem Yağmur EROĞLU, Lawyer | Ibrahim Şahin UZUNOĞLU Summer Intern (Law School Student) |
ABSTRACT According to the Property Tax Law (“PTL”), the subject matter of the tax comprises buildings, land, and plots located within the borders of Turkey. Property tax is a special tax generally collected by municipalities; the values to be taken as basis for this tax base are redetermined every four years. In the current year 2025, the minimum plot and land square meter unit value assessments regarding the determination of property tax value to be applied for the years 2026–2029 have been concluded with the assessment procedures being finalized and notification procedures being carried out until the end of business hours on 30 June 2025 pursuant to Article 49/b of the Tax Procedure Law (“TPL”) numbered 213. The increase in value assessment rates will simultaneously cause increases in other tax items such as the contribution share for the protection of immovable cultural assets, valuable residence tax, title deed fee, and inheritance and transfer tax. In this article, first the definition of property tax will be made; subsequently, the procedures for filing annulment lawsuits against commission assessment decisions regarding land and square meter unit values forming the basis of property tax will be examined.
Keywords: Property Tax Value, Inheritance and Transfer Tax, Title Deed Fee, Valuable Residence Tax, Lawsuit Against Assessment Commission Decisions Forming the Basis of Property Tax Calculation.
INTRODUCTION Benjamin Franklin emphasized the importance of tax in our lives by stating, “In this world, nothing is certain but death and taxes¹” regarding taxation. Particularly our properties such as houses, buildings, and plots that we own; even though their ownership belongs to us, they are subjected to taxation by the state. Property owners are obliged to pay property tax twice each year pursuant to Article 30 of the PTL for the immovables they own.² It is important that they know how the property tax required to be paid for these immovables is assessed, how it is paid, and how property owners can better protect their rights against the decisions of the assessment commission. This article essentially does not address property tax as a whole; rather, it examines legal disputes concerning assessment decisions regarding exorbitant land and land square meter unit values for the 2026-2029 period and contains recommendations on how property tax clients can better protect themselves.
I. PROPERTY TAX
Pursuant to Article 1 of the PTL numbered 1319, payments made to the state for immovables such as buildings, plots, and houses owned by persons are called property tax.
a. Legal Nature and Calculation of Property Tax
Property tax is a special type of wealth tax levied on buildings, plots, and lands belonging to natural or legal persons. One of the purposes of wealth taxes is to remedy income inequality in society. For this tax, rather than the taxpayer, the characteristics of the immovable property are of importance. Indeed, in Article 21 of the Law on the Procedure for Collection of Public Receivables (“LPCPR”) numbered 6183, it is stated that building and land taxes are public receivables arising from the rem in rem of the immovable property. In this context, in property tax as well, the immovables owned demonstrate the existence of payment capacity and constitute the subject matter of the wealth tax. However, it should not be forgotten that property tax is used as an important local government financing tool due to its significant place in municipal budgets. The authority for assessment and collection required for the calculation of property tax has been granted to municipalities. Municipalities exercise these authorities by accruing based on certain values determined by the assessment commission.³ Pursuant to the Tax Law and current legislation, property tax assessment procedures are carried out once every four years. Land and land values are determined once every four years by assessment commissions, and liability commences as of January of the year following the year in which the assessment procedure is carried out based on the newly assessed value.⁴ In Article 29 of the PTL numbered 1319, a regulation was made stating that the tax value is calculated “a) For plots and lands, according to the unit values assessed by assessment commissions for plots for each neighborhood and for unparceled lands to be considered as plots in each village according to streets, avenues or regions differing in terms of value (avenues, streets or those differing in terms of value in touristic regions shall be determined by relevant governors on maps, blocks or parcels), and for lands for each province or district according to the type of land (barren, bottomland, wetland),” thus making reference to TPL provisions regarding the determination of tax value. The referenced TPL provision regarding determination is Article 49 bis added to this Law by Article 1 of the Law numbered 4751.
b. Property Tax Assessment and Accrual Processes
Although a regulation was made in Article 21 of the PTL stating that “… taxes assessed shall be deemed to have accrued on the date they are assessed and shall be notified to the taxpayer in writing,” in practice, assessments made by assessment commissions once every four years are generally not notified to taxpayers, and property tax taxpayers learn about this assessment at the time of payment. Regarding this situation, the following decision was rendered by the Council of State Tax Disputes Chamber Board dated 13.11.2019 and numbered E.2019/262, K. 2019/917:
“The rule stated in Articles 11 and 21 regarding the assessment and accrual of property tax that ‘Taxes assessed in this manner shall be deemed to have accrued on the date they are assessed and shall be notified to the taxpayer in writing’ is a regulation brought forth with the aim of ensuring that the property tax assessed in the name of the taxpayer is learned by the taxpayer before payment. In the two situations mentioned above, in a lawsuit filed against the property tax assessment made in the name of the taxpayer, the period for filing a lawsuit must be determined according to whether the said writing has been notified to the taxpayer or not. Because, property tax assessed by municipalities based on minimum unit values assessed once every four years by assessment commissions is not notified to taxpayers in practice. In this case, taxpayers learn about the property tax assessment made regarding them at the time of payment… In this situation, in all years following the year in which assessment procedures are carried out once every four years… if no writing regarding property tax assessment has been notified to the taxpayer by the defendant municipality, it must be calculated by taking into account the notification date of this writing, and if no writing has been notified by the municipality, the date on which the property tax was paid by the taxpayer must be accepted as the date of learning about the assessment made, and the period for filing a lawsuit must be initiated from the payment date.”
With this decision, the Council of State Tax Disputes Chamber Board aimed to close the gap between theory and practice and to prevent possible loss of rights that taxpayers may suffer in this way. Therefore, the period for filing a lawsuit varies depending on whether the assessment has been notified to the taxpayer or not. If notified, the notification date; if not notified, the date on which the tax was paid has been accepted as the beginning of the period for filing a lawsuit. Currently, the notification procedures of determination and assessment procedures of assessment land and principal land and square meter unit values that will be valid for property tax accrual between the years 2026-2029 to the concerned parties (chambers of commerce, headmen’s offices, etc.) were carried out until the evening of 30 June 2025. Persons and institutions to whom the decision has been notified can exercise their right to file a lawsuit within 30 days from the notification date pursuant to Article 7 of the Administrative Procedure Law (“APL”).⁶ However, as also mentioned in the above Council of State Tax Disputes Chamber Board decision, it can be stated that the date for filing a lawsuit for taxpayers will begin with the date of learning, and the date of learning is the payment date. For persons and institutions to whom the decision has been notified, the period for filing a lawsuit against this decision notified on 30 June 2025 is 30 days from the notification date; this date corresponds to 30 July 2025. Since there is a judicial recess between 20 July and 31 August, lawsuits to be filed by concerned parties regarding this matter can be filed within 7 days from the end of the judicial recess period and must be filed at the latest by Monday, 8 September 2025. Clients to whom the decision has not been notified, pursuant to the Council of State Tax Disputes Chamber Board’s decision dated 13.11.2019 and numbered E.2019/262, K. 2019/917, will be able to file a lawsuit within the general 30-day period for filing a lawsuit from the date of learning against assessment commission decisions and at the latest until the last day of the year in which the said decision was taken.
II. ANNULMENT LAWSUIT AGAINST ASSESSMENT COMMISSION DECISIONS
a. Legal Nature of Annulment Lawsuit and Parties
Pursuant to the Council of State Tax Disputes Chamber Board’s decision dated 16.03.2016 and numbered E.2016/319, K. 2016/334, since assessment commission decisions are accepted as being “in the nature of regulatory acts,” it is concluded that the annulment of these decisions can be requested. The lawsuit is filed against the relevant municipality. Due to their regulatory act character, assessment commission decisions are acts having “ultra partes” effect. In other words, these acts having effects above persons; even if taken by someone residing in a certain neighborhood, street, or avenue, they have binding effect on others in the same situation.
b. Procedures to be Carried Out Upon Filing the Lawsuit
Heading VIII of the Property Tax Internal Circular numbered 2025/1 regulates the procedures to be carried out in case assessment commission decisions become the subject of a lawsuit. If no lawsuit has been filed against assessment commission decisions, the assessed values will become final. If a lawsuit has been filed but no decision has been made regarding stay of execution or on the merits; in this case as well, the implementation of assessment commission decisions will continue.
c. Grounds for Filing a Lawsuit
As grounds for filing a lawsuit; exorbitance of value (excessively high valuation), formation of the assessment commission contrary to procedure, unlawfulness of the decision (non-compliance with legislation), insufficient reasoning of the decision, decision taken based on incomplete or incorrect information may be shown. Indeed, according to Article 7 of the ‘Regulation on the Assessment of Tax Values to Form the Basis of Property Tax’; the tax value of buildings is assessed according to their manner of use, type and class of construction. In the assessment of tax value, it has also been stated that the following characteristics of buildings will be taken into consideration:
- Distance and proximity to workplaces and residential places and facilities such as parks, gardens, schools, and transportation status,
- Location in terms of squares, shores, avenues and streets where it is located,
- Whether municipal services such as water, electricity, gas and sewage exist or not,
- Size, number of floors, number of internal sections such as rooms, halls, bathrooms,
- Usability status in terms of internal sections,
- Whether it is located on the front and rear facade,
- Degree of development,
- Whether elevator, heating and air conditioning installations exist or not,
- Appurtenances,
- View status.
However, in practice, in order to achieve success in such lawsuits, it is necessary to present comparative precedent reports regarding immovables of similar nature located on the same street or in the same region and to prove that the exorbitant increase is not based on objective grounds.
d. Procedures to be Carried Out After the Decision
Pursuant to subsection (c) of Heading VIII of the Property Tax Internal Circular (“PTIC”) numbered 2025/1, “In cases where as a result of filed lawsuits tax courts decide in the direction of annulment of the assessment commission decision; i- For decisions not deemed appropriate by relevant governors to be subject to appeal before the Council of State, assessment commissions to immediately convene and make a new decision,” “ii- For tax court decisions deemed appropriate by relevant governors to be subject to appeal before the Council of State, to immediately carry out procedures pursuant to paragraph one of Article 28 of the Administrative Procedure Law numbered 2577, this period shall not exceed 30 days in any case, and within this period new assessment shall be made by assessment commissions taking into account tax court decisions” is required. Pursuant to the relevant article, if at the end of the filed lawsuit the tax court decides in the direction of annulment of the assessment commission decision, assessment commissions must convene and make a new assessment. Assessment commission decisions regarding assessments to be made anew must be specified with reasoning, and in the reasoning it must be explained that minimum plot square meter unit values have been determined taking into account the tax court decision. If the tax court decides on partial annulment and partial approval upon assessment commission decisions, the assessment commission will convene for the annulled part of the decision and make a new value determination. The lawsuit to be filed is an annulment lawsuit. In these lawsuits, the annulment decision only eliminates the current transaction, in other words, the value assessed by the commission. Although courts do not have the authority to make new value assessments, they have the authority to annul the exorbitant parts of the assessments made. The judicial body cannot carry out transactions in place of the administration, it can only examine conformity with law. However, in practice, in case of annulment of the assessment commission decision, it is encountered that property tax accrual is corrected over the value redetermined by the court. In case the filed annulment lawsuit is won, it is possible for the market value and consequently the property tax to decrease.
III. EFFECT OF INCREASE IN PROPERTY TAX VALUE ASSESSMENT ON OTHER TAXES
It must be emphasized importantly that the property market value determined by the commission used to determine property tax does not form the basis of only property tax; but also of many public revenues such as title deed fee, valuable residence tax, contribution share for the protection of immovable cultural assets.
a. Title Deed Fee
Title deed fee set forth in the Fees Law numbered 492 is a fee collected from both the buyer and the seller in immovable purchase and sale transactions. With Article 63 of the relevant Law, it has been stipulated that “Title Deed and Cadastre Fee shall be calculated over the higher of the tax value and the value declared by the taxpayer.” Explanations have been made with the Fees Law General Communiqué numbered 48 published for the implementation of this provision. According to the said Communiqué; regarding title deed fee related to paragraph 20/a of tariff numbered 4 attached to the Fees Law, it will be calculated based on property tax value, and during these transactions, if taxpayers wish to declare a value above the property tax value, it has been stated that the declared value will form the basis for title deed fee assessment.⁷ If the sale of the immovable is planned in the near future, the increase in market value will cause the title deed fee to increase as well.
b. Valuable Residence Tax
Valuable Residence Tax is regulated in Article 42 of the PTL. Pursuant to Article 44 of the relevant Law, “The base of the tax is the part of the building tax value exceeding the amount stated in Article 42” is stated. Pursuant to the legal provision, for residential immovables located within the borders of Turkey, the lower and upper limits of residential immovables subject to valuable residence tax to be applied in 2025 are determined according to property tax revaluation rates. For the year 2025, valuable residence tax will be collected at rates varying between 0.3% starting and 1% from residential immovables exceeding 15,709,000 TL.⁸ The exorbitant increase of minimum square meter unit values by the property assessment commission will cause an increase in valuable residence tax as well as a result of it being calculated from the same base.
c. Contribution Share for the Protection of Immovable Cultural Assets
Pursuant to Article 12 of the Law on the Protection of Cultural and Natural Assets (“LPCNA”) numbered 2863, regarding this contribution share, it is stated that “For the purpose of being used for the protection and evaluation of cultural assets within the fields of duty of municipalities and provincial special administrations, Contribution Share for the Protection of Immovable Cultural Assets is accrued at the rate of 10% of the property tax accrued regarding the taxpayer pursuant to Articles 8 and 18 of the Property Tax Law numbered 1319 dated 29/7/1970 and is collected together with property tax by the relevant municipality.” Since the contribution share for the protection of immovable cultural assets is calculated at a rate of 10% over the property tax base, the increase of the minimum square meter unit value calculated by the assessment commission will cause a similar increase in this contribution share as well.
CONCLUSION
Property tax is a type of wealth tax that takes the immovable property as its center rather than the taxpayer. In this type of tax, the characteristics of the immovable property come to the forefront. The determination of minimum square meter unit values for plots and lands is carried out once every four years by an assessment commission specially established for this matter. The 2025 assessment valuation affects the years 2026–2029. In order for clients not to suffer loss of rights, a lawsuit must be filed within the general 30-day period for filing a lawsuit from the date of learning against assessment commission decisions and at the latest until the last day of the year in which the said decision was taken. As grounds for filing a lawsuit; exorbitant valuation, formation of the assessment commission contrary to procedure, unlawfulness of the decision, insufficient reasoning of the decision, decision taken based on incomplete or incorrect information may be shown however much, in practice it is necessary to present comparative precedent reports regarding immovables of similar nature and to prove that the exorbitant increase is not based on objective grounds. The increase of the property tax base will cause an increase in title deed fee, valuable residence tax and contribution share for the protection of immovable cultural assets as well.
¹ “In this world, nothing is certain but death and taxes.”
² Article 30 of the PTL numbered 1319, “Property Tax is paid in two equal installments, the first installment in March, April and May months, the second installment within November.”
³ Article 11 of the PTL numbered 1319, “Building tax is assessed annually by the relevant municipality; a) Once every four years, based on the tax value calculated according to Article 29 in January and February months of the budget year following the year in which assessment procedures are carried out. In the years following the assessment and accrual made, building tax calculated over the tax value determined according to Article 29 shall be deemed to have accrued for that year as of the beginning of each budget year.”
⁴ Article 9 of the PTL numbered 1319: “Building tax liability; b) In assessment procedures carried out once every four years, begins from the budget year following the date on which the assessment procedure is carried out.”
⁵ Bilal CAN – Zübeyr BÜLBÜL, “Plot and Land Assessment Commission Decisions and Filing Lawsuits Against Them,” TAAD, July 2013, Year: 5, Number: 14, p. 871
⁶ Bilal CAN, Zübeyr BÜLBÜL and Veysel DAĞAŞAN, Annotated and Precedented Property Tax Practice in Municipalities, Union of Municipalities of Turkey, Ankara, January 2013, p. 685.
⁷ Serkan KURT – Caner NALCI, “Title Deed – Cadastre Fees and Some Special Exemptions Related to This Fee,” Tax Report, Number: 196, January 2016, Access Date: 7 August 2025 http://www.vergiraporu.com.tr/makaleler/vergi-raporu-ocak-2016-online_196
⁸ Tax Inspection Board, “Tax Inspection Board Activity Report 2018,” Access Date: 7 August 2025 https://ms.hmb.gov.tr/uploads/2019/04/VDK-2018-Birim-Faaliyet-Raporu-1102019-002.pdf