VAT Exemption when Buying Real Estate in Turkey

Buying real estate in Turkey can be an opportunity, but understanding the details of the VAT exemption is crucial for the process to go smoothly. For both local and foreign investors, knowing how the VAT exemption works can save money and make buying real estate easier. In this guide, we take a look at the details of the VAT exemption in Turkey and what it means for buyers.

What is the VAT Rate for Real Estate in Turkey?

Value Added Tax (VAT) in Turkey varies depending on the type and location of the real estate:

• Houses are generally subject to a VAT rate between 1% and 20%.
• Commercial real estate (offices, shops, warehouses) are generally subject to a VAT rate of 20%.

Exemptions and reduced rates are also available for some real estate transactions.

What is VAT Exemption?

VAT exemption is an arrangement where certain transactions are exempt from Value Added Tax. In the Turkish real estate sector, VAT exemption applies to certain types of real estate and under certain conditions.

Types of Real Estate that can Benefit from VAT Exemption

1. Dwellings: Apartments, villas and residential dwellings are eligible for VAT exemption.
2. Commercial Real Estate: In some cases, offices, shops and warehouses may also be exempt from VAT.

Conditions for VAT Exemption

1. First Time Buyers: The VAT exemption applies to first-time buyers of newly built houses in Turkey.
2. Primary Residence: To benefit from the exemption, the real estate purchased must be the buyer’s primary residence.
3. Price Limit: There may be a price limit for exemption. Properties exceeding this limit are subject to the standard VAT rate.

Advantages of VAT Exemption for Buyers

Cost Savings | 20% Savings

With the VAT exemption, buyers can save a significant amount of money on the purchase of real estate.

Ease of Process

VAT exemption simplifies the procurement process and reduces the administrative burden, making transactions more efficient.

Increasing Demand

The existence of the exemption stimulates the market by increasing demand for real estate, especially among first-time buyers.

How to Determine VAT Exemption Eligibility?

1. Seek Legal Counsel: Get support from a legal advisor familiar with Turkish real estate laws.
2. Review Property Listings: Identify VAT exempt properties.
3. Verify Documents: Request exemption documents from the seller or developer.

Documents Required for VAT Exemption

• Notarized Passport Translation
• Migration Management Certificate (provided by your lawyer)
• Police Entry Records (provided by us)
• Title Deed or Sales Contract
• Proof of address from the official authority in your country (Apostilled)
• Official documents from the project developer
• Power of attorney to be given to your lawyer
• Tax number (your lawyer can get it for you)
• The developer company must have at least 51% Turkish shareholders.
• You must not have a residence permit in Turkey within the last 6 months.
• You must not be a Turkish citizen.

Note If the real estate purchased with VAT exemption is sold within 3 years, VAT will have to be paid.

Conclusion

Understanding the details of VAT exemption in Turkey allows you to make informed decisions during the real estate buying process. The exemption not only provides cost savings to the buyer, but also contributes to keeping Turkey’s real estate market vibrant and dynamic.