Erdogan's lawyer Muammer Cemaloglu is seeking 100,000 Turkish Liras (USD 37,300) in compensation for slander from Kemal Kilicdaroglu, leader of the Republican People's Party (CHP), the state-run Anatolia news agency reported.
Erdogan's 1,150-room palace, which was built at a cost of around 490 million euros (USD 615 million), has been condemned by opponents as an authoritarian excess.
Kilicdaroglu, who repeatedly attacked Erdogan for his profligacy in the run-up to the parliamentary polls, claimed on Saturday that the presidential palace had golden toilet seats.
Erdogan then went even further, asking him whether he knew about the gold-plated toilet seats in the palace because he had cleaned them.
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"Hey, Kilicdaroglu, when did you tour the toilets (of the palace) and clean them and thus found out that they were gold-plated?" Erdogan said at a rally in eastern Turkey.
Kilicdaroglu responded to Erdogan in an interview with private CNN Turk television late Monday, saying: "I kiss the eyes of those toilet cleaners, those labourers who provide for their children. This answer should be enough."
The Turkish Union of Engineers and Architects' Chambers, which closely monitors the spending on the palace, joined the debate on Tuesday and said that the toilets at the palace cost up to 10,000 Turkish Lira (USD 3,700) each.
Built in a suburb of Ankara, the palace covers an area of some 200,000 square metres (2.15 million square feet) -- more than 30 times the size of the White House, bigger even than France's majestic Palace of Versailles.