VAT exemption when buying Turkish real estate

Updated: 04 May 2020 Created: 04 May 2020


How to obtain VAT exemption on Turkish real estate investment

Investing in foreign property generally comes with a slew of added expenses and taxes. Fortunately, for people buying real estate in Turkey, VAT is not one of them.

Value Added Tax (VAT - known in Turkey as Katma Deger Vergisi) can be a considerable expense for foreign investors. However, at the time of writing (May 2020), there is a concession in place to exempt foreign investors from paying VAT on their Turkish property investments. The concession is one of the many moves the Turkish government has made to make investing in property in Turkey more attractive.

It’s important to note that this concession might be revoked at any time. Please speak with one of our advisors about the current situation.

Who is eligible for VAT exemption in Turkey?

- Turkish citizens who have lived abroad for more than six months with their work and residence permits.

- Foreigners who are not resident in Turkey.

- Organisations that have not made any profits in Turkey, or do not have a Turkish office or business operation.

Please note: Turkish citizens who reside in foreign countries, or work for institutions, establishments, and institutions based in Turkey will not be able to benefit from VAT exemption. The payment must be made in foreign currency, and transferred from overseas.

What conditions do I need to satisfy in order to apply for VAT exemption?

- New build purchases only: VAT exemption is only applied to new real estate properties purchased in Turkey from construction companies. However, second hand and resale properties are generally VAT exempt anyway.

- The purchase price must be paid in foreign currency.

- Buyers will not be able to sell their property for a year. If the property is sold within the first year, sellers will need to pay the exempt VAT.

What types of VAT are levied in Turkey?

There are three different VAT rates levied on real estate transactions in Turkey. The rate depends on the type and size of the purchased properties.

1. For residential real estate less than 150m2: 1% VAT applicable

2. For residential real estate over 150m2: 8% VAT applicable

3. For commercial real estate and dual-use residential properties: 18% VAT applicable

What documents do I need if I am a Turkish citizen living abroad?

- Work permit, or equivalent documents from the official embassies or consulates of Turkey.

- Proof showing that the citizen was resident overseas for at least six months prior to property purchase.

What documents do I need if I am a foreign investor?

- A notarised copy of your current passport

- A document issued by the Turkish tax office stating that the buyer is not resident in Turkey. For this, you’ll need to provide the following documents:

    1. Notarised passport translation

    2. Notarised proof of foreign address

    3. Passport transactions from the Turkish Police Department

    4. Letter from the General Directorate of Immigration office that shows the applicant is not resident in Turkey.

This information is liable to change. While we do our best to keep up to date with all things tax, it's best to speak with your Property Turkey advisor and find out the latest information.

Property Enquiry

Smartly priced seafront Homes Istanbul

Smartly priced seafront Homes Istanbul

Do not miss this opportunity