How do I get VAT exemption when buying a property in Turkey?
VAT or KDV as symbolized in Turkey by its full name (Katma Değer Vergisi) is a tax levied in varying proportions on all products in Turkey, the VAT rate varies according to the product, ranging between 3 segments, 1%, 8% or 18%.
VAT is levied on properties in According to several factors, including the price per square meter of the property specified in the title deed, and the right of tax is established when selling the property, i.e.the seller is obliged to determine the price of the property plus VAT, knowing that properties with a net area of more than 150 square meters apply the tax at a maximum of 18%.
To attract foreign investment, the Turkish government has abolished the value tax on real estate sales to foreigners and Turkish citizens living abroad for more than 6 months, under certain conditions that must be achieved to benefit from the exemption.
Conditions for exempting a property from VAT in accordance with Turkish law:
The law requires several conditions that must be met for the property to be exempted from VAT, as these conditions are divided into conditions that must be met in the property sold, conditions relating to the person of the buyer, and general conditions.
♦ Conditions to be met with the property:
1 - The property must be a residence or workplace (commercial), and therefore the exemption does not include farmlands or lands not intended for construction.
2 - Real estate benefits only in the first sale after construction, i.e., real estate purchased directly from construction companies. The property is therefore not exempt from VAT in the following sales.
3 - The property must be ready for delivery, with a building permit or a Floor Easement Deed.
♦ Conditions to be met by the buyer's person:
1 - If the buyer of the property is a Turkish citizen, a residence permit and work outside Turkey must be established for at least 6 months.
2 - If the buyer of the property is a foreign person (a natural person), he or she must not be residing in Turkey where he is required to produce a "non-resident document" issued by the governor.
3 - If the buyer of the property is a foreign person (legal person), he or she must not have a permanent representative in Turkey.
♦ General conditions:
1 - Bank transfer receipt (Dekont) proves that the price of the property has been transferred to Turkish banks, and that payment is made in foreign currency.
2 - Pledge not to sell the property for a year starting from the date of the transfer of ownership in Tabu.
3 - The property must have been purchased after April 1, 2017, and if the purchase is made before that date, the exemption may be used if a title deed is issued for the tabu after that date.
Note: There is a common misinformation that a foreigner benefits from exemption only for the first property he has purchased, which is not true. The exemption can be used for more than one property if the above-mentioned conditions are met.