VAT Exemption When Buying Real Estate in Turkey | 2025 Guide

Introduction Why is VAT Exemption Important?

Buying real estate in Turkey offers attractive opportunities for both local and foreign investors. However, understanding the Value Added Tax (VAT) exemption issue correctly provides significant cost advantages during the purchase process. In this guide, we will examine in detail the VAT rates for real estate in Turkey, the exemption requirements, the necessary documents and the advantages for buyers.

VAT Rates for Real Estate in Turkey

The VAT applicable to the purchase of real estate in Turkey varies depending on the type and location of the real estate:

• Residential buildings: Generally subject to VAT between 1% and 20%.
• Commercial real estate (office, shop, warehouse): 20% VAT is usually applied.
• Some transactions are subject to reduced rates or exemptions.

🔗 Official source: Revenue Administration (RA)

What is VAT Exemption?

VAT exemption is the exemption of certain transactions from Value Added Tax. In Turkish real estate law, this exemption can be applied to new homes for sale for the first time or to buyers who meet certain conditions.

Types of Real Estate that can Benefit from VAT Exemption

• Residential properties: Real estate for living purposes such as apartments, villas and residences.
• Commercial Real Estate: In some projects, immovable properties such as offices, shops and warehouses may also fall within the scope of the exemption.

Conditions for VAT Exemption

In order for the exemption to apply, certain conditions must be met for both the buyer and the immovable property:

1. First Purchase: Valid only for newly constructed and first time sale properties.
2. Primary Residence Requirement: The property purchased must be the primary residence of the buyer.
3. Price Cap: Exemption does not apply to immovable properties above the upper limit.
4. Foreign Buyer Requirement: Foreigners who do not have a residence permit in Turkey within the last 6 months can benefit.
5. Turkish Partnership Ratio: At least 51% of the project developer must be a Turkish partner.
6. Citizenship Requirement: Turkish citizens cannot benefit from this exemption.

Advantages of VAT Exemption for Buyers

• Cost Savings: Up to 20% advantage on the purchase price.
• Ease of Transaction: Reduced tax burden makes the process more practical.
• Increased Demand: It stimulates the market, especially among foreign investors.

How is Eligibility Determined?

• Seek Legal Advice: Consult a lawyer who specializes in real estate law to ensure that the process goes smoothly.
• Review Project Documents: Search for projects eligible for VAT exemption.
• Request Official Documents: Ask the developer or seller for exemption documents.

Documents Required for VAT Exemption

• Notarized passport translation
• Migration Management document (through a lawyer)
• Police entry-exit records
• Title deed or sales promise agreement
• Apostilled address document from the recipient’s country
• Official documentation from the developer
• Power of attorney (to be given to the lawyer)
• Tax identification number (can be obtained by the lawyer)

⚠️ Important Note: If the real estate purchased within the scope of the exemption is sold within 3 years, VAT must be refunded.

Risks and Cautions

• Early sale risk: VAT is payable if the sale is made before the 3 years are up.
• Developer compliance: Ensure that the project meets legal requirements.
• Legal complexity: Misdirection can lead to serious costs.

You can also Review

• Turkish Citizenship by Investment

Official Sources

• Republic of Turkey Ministry of Trade
• Revenue Administration
• TKGM – General Directorate of Land Registry and Cadastre

Frequently Asked Questions (FAQ)

Question 1: Can all foreigners benefit from VAT exemption?

No. Certain conditions must be met. For example, not having resided in Turkey in the last 6 months and buying a new residence for the first time.

Question 2: What happens if I sell before the 3 years are up?

VAT not paid under the exemption is refunded to the tax office.

Question 3: Does the exemption apply to commercial real estate?

In limited cases, it may apply subject to developer or project approval.

Conclusion

Getting the VAT exemption right in Turkey offers huge cost advantages for both foreign investors and domestic buyers. However, the process can only be secured if the requirements are met in full.

👉 MFY Legal’s real estate law experts carry out the entire process on your behalf, verify the documents and complete the transactions without any errors.

📩 Request your personal VAT exemption checklist by contacting us today.