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The Law No. 7566 on Amendments to Tax Laws and Certain Laws and Decree Laws ("Law No. 7566") was published in the Official Gazette dated 19/12/2025 and numbered 33112 Law No. 7566 introduces a wide range of amendments to the tax legislation, including the abolition of the interest deduction for residential rental income, the increase of the tax loss penalty applicable to under-declared values in real estate transfer transactions, the introduction of an upper limit on increases in real estate tax values, new regulations regarding certain notary and license fees, and tax provisions relating to certain investment funds and UEFA organizations.
Within the scope of this information note, the legislative amendments introduced by Law No. 7566 regarding real estate are addressed.
The Interest Deduction for Residential Rental Income Has Been Abolished
Pursuant to Article 74 of the Income Tax Law No. 193, interest expenses arising from loans used for rental properties were previously deductible as expenses in the declaration of rental income. However, as a result of the amendment introduced by Article 1 of Law No. 7566, the deduction of interest expenses related to loans used for the acquisition of residential properties from rental income has been abolished. The explanatory memorandum of the amendment states that the interest deduction practice was abolished in order to eliminate the tax inequality between individuals who acquire residential properties through housing loans and those who acquire such properties without using loans.
This regulation entered into force on the date of its publication and shall apply to tax returns to be filed in respect of income and earnings for taxation periods beginning on or after 01.01.2025.
Clarification on the Determination of the Title Deed Fee Base
Pursuant to subparagraph 20/a of the section titled "I – Title Deed Transactions" of Tariff No. (4) annexed to the Fees Law No. 492, title deed fees were previously levied on the basis of the "real estate tax value, provided that it is not lower than the declared value." However, this wording was amended on the grounds that it caused uncertainty in practice regarding the tax base of the title deed fee.
Under the amended provision, it is explicitly stipulated that the title deed fee shall be calculated on the basis of the declared transfer and acquisition value, provided that it is not lower than the real estate tax value. Accordingly, the tax base that had been applied de facto in practice has now been expressly set forth in the statutory text.
This regulation entered into force as of the publication date of Law No. 7566.
Upper Limit Introduced for Increases in Real Estate Tax Values for the 2026–2029 Period
Article 29 of the Real Estate Tax Law No. 1319 ("RET Law") sets forth the principles for determining the tax value of real properties. Accordingly, the tax value is calculated once every four years based on the unit values determined by valuation commissions pursuant to the Tax Procedure Law for land and plots, taking into account the region, street/road, or type of land, and for buildings, based on the construction cost per square meter determined by the relevant ministries together with the land or land share value. The tax value determined in this manner is subsequently increased each year by an amount equal to half of the revaluation rate applied to the previous year's tax value.
Indeed, the unit values determined at the end of May 2025 gave rise to public debate due to significant increases announced in June, and a number of taxpayers initiated legal proceedings seeking the annulment of the relevant decisions. As similarly excessive increases in unit values had sparked public controversy in 2019 and were subsequently addressed by a statutory amendment limiting the increase to 50%, expectations arose once again in the public for a comparable legislative intervention.
In line with these expectations, pursuant to the amendment introduced by Article 10 of Law No. 7566, it has been stipulated that the tax value to be calculated for the year 2026 may not exceed three times the real estate tax value applied for the year 2025.
This regulation entered into force as of the publication date of Law No. 7566.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
