Real Estate in Turkey: Cadastral and Actual Value – What is Important to Know

The Turkish real estate market is full of its own unique features, and one of the most noticeable is the gap between the cadastral and actual value of the properties. Often, the actual sale price is significantly higher than the officially recorded one, sometimes 3-5 times! This may seem strange or even frightening to those who are new to the Turkish system, but in fact, there is nothing unusual about it, and there are even some advantages.

Let's take a closer look. There are two types of property value in Turkey:

Cadastral value: This is the official price fixed in the purchase and sale agreement. The state calculates its minimum value based on such parameters as the type of property (apartment, house, commercial property), area, location and other factors. The cadastral value is the basis for calculating the transaction tax (4%), which makes understating it beneficial from a tax perspective.

Actual value: This is the actual price that the parties agreed on the transaction. It can significantly exceed the cadastral value, and this difference is usually paid in cash.

How is the difference paid?

The process is organized quite transparently. For the legal exchange of currency for the official cadastral value, a DAB (Devir Alım Belgesi) certificate is used, which you receive from the bank. The bank recalculates the amount corresponding to the cadastral value and packages it. The remainder, which is the difference between the cadastral and actual price, is transferred separately. Companies such as Neginski, with their many years of experience in the international real estate market (8 branches in 7 countries!), provide assistance in organizing this meeting and the safe transfer of funds.

Advantages and disadvantages of underpricing:

• Advantages:

Tax savings: The transaction tax is calculated based on the cadastral value, which significantly reduces your expenses.

Confidentiality: In some cases, underpricing allows you to maintain the confidentiality of the real cost of the purchased property.

• Disadvantages:

Restrictions when applying for a residence permit/citizenship: To obtain a residence permit or citizenship in Turkey, it is the official (cadastral) value that is taken into account, and not the real price of the transaction. Thus, if your priority is obtaining a residence permit or citizenship, then underpricing can create difficulties.

What to choose?

The choice between saving on taxes and the opportunity to easily obtain a residence permit/citizenship is an individual decision that depends on your priorities. If your main goal is to invest in real estate with minimal tax costs, then underpricing can be beneficial. If you need a residence permit or citizenship, then it is better to consider the possibility of indicating the real cost in the contract.

In conclusion, the difference between the cadastral and actual value of real estate in Turkey is a feature of the local market that should not cause concern. With the right approach and the help of Mercury Group professionals, you can successfully go through all stages of the transaction, minimizing risks and achieving the desired result. The main thing is to clearly understand the mechanism of the system and weigh all the pros and cons before making a decision.