Amendments to the value-added tax law in Turkey – Reduction in value added tax on real estate in Turkey
In the real estate investment sector, real estate tax reductions always attract the attention of foreigners in Turkey. Therefore, in this article from Ebla Real Estate, we talk about the real estate tax cuts in Turkey.
Table of contents:
- An introduction.
- The real estate tax cuts in Turkey 2022.
- Amendments to the value-added tax on real estate in Turkey:
- Reducing the value-added tax of residential apartments.
- Reducing the value-added tax of land.
- Amendments to the value-added calculation of urban transformation housing.
- What are the conditions for exemption from the value-added tax of 18%?
An introduction:
Turkish President Recep Tayyip Erdogan announced a package of value-added tax cuts in the country that included several economic sectors including the real estate sector after the weekly meeting of the Turkish government at the Presidential Complex in the Turkish capital, Ankara.
The real estate tax cuts in Turkey 2022:
Tax cuts are an effective means for the economic decision-maker to stimulate the local economy as well as a motive for attracting foreign investment.
The Turkish government has implemented new measures and has reduced the value-added tax on several products, which leads to a decrease in their prices in general.
The real estate sector was among the sectors covered by the tax cuts announced by the Turkish government. The value-added tax was reduced from 18% to 8% for properties whose area does not exceed 150 m². Moreover, 18% is imposed on real estate over 150 m².
Amendments to the value-added tax on real estate in Turkey:
Reducing the value-added tax of residential apartments:
The value-added tax for residential apartments became 1% for residential apartments that do not exceed 150 m², 8% for apartments with an area of 150 m², 18% for apartments that exceed 150 m².
Reducing the value-added tax of land:
The new law in Turkey stipulates that the value-added tax on lands prepared for construction or agricultural use was reduced from 18% to 8%. Thus, that reduced the burdens of the investors in the real estate sector in Turkey.
Amendments to the value-added calculation of urban transformation housing
The Turkish government also reduced the value-added tax for the residential apartments within the framework of the urban transformation process, which aims to renovate some old residential blocks and fortify them against earthquakes.
Thus, the value-added tax is 1% for apartments of less than 150 sqm and 18% for apartments over 150 sqm.
Note:
The new law will be valid on the properties whose construction permit was obtained after the date of the decision, and will not be valid on the properties whose construction permits were obtained before the date of the decision.
What are the conditions for exemption from 18% VAT?
- The investor should not be residing in Turkey.
- The person applying for the exemption also must not have resided for more than 6 months in Turkey.
- Moreover, the applicant must not have a valid residence permit in Turkey.
- The applicant also should not have a registered address in Turkey.
- Furthermore, the property must be new.
- Paying the value of the property in foreign currency, and the money paid must come from outside the country exclusively, either by bank transfer or a customs declaration document in case the investor transfers the money to Turkey in cash.
- Tax exemption in Turkey, includes residential and commercial real estate and not agricultural real estate.
- In addition, the property benefiting from the tax exemption shall not be sold again for three years.
Thus, Turkey granted foreign investors a lot of facilities and provided them with many privileges to increase the number of investors and motivate them to buy properties in Turkey.
Edited by: Ebla Group Real Estate
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