Buying Real Estate in Turkey? Here’s Your Guide to VAT Exemptions!
Overseas property investments often come with a cascade of additional costs and taxes. Yet, when it comes to Turkey, there’s good news. The dreaded Value Added Tax (VAT) – or as the locals call it, “KDV: Katma Deger Vergisi” – isn’t something foreign buyers need to worry about. Why? Because Foreigners in Turkey can benefit from VAT Exemption for real estate Let’s delve in.
Understanding VAT for Foreign Buyers
Foreign investors usually grapple with VAT as it can be a hefty outlay. But as of August 2021, Turkey has offered a provision: they’ve scrapped VAT for foreign real estate investors. This move is one of many initiatives by the Turkish government to pique interest in their property market.
Who Gets the VAT Pass?
If you’re considering buying, you might be eligible for VAT exemption if you are:
- A Turkish citizen who has lived and worked abroad for over six months.
- A foreigner without a residence permit in Turkey.
- Part of an organization that hasn’t earned profits in Turkey and lacks a local office or business setup.
However, a few don’t make the cut. For instance, Turkish citizens residing overseas or those working for entities based in Turkey. And remember, you need to process the payment in foreign currency, routed from overseas.
When Does the VAT Exemption for real estate in Turkey Apply?
Firstly, only newly built properties qualify, provided they’re bought directly from construction businesses in Turkey. Purchases of secondhand or resale properties generally aren’t subject to VAT.
Secondly, remember the golden rule: Always use foreign currency for the transaction.
The Different VAT Rates in Turkey
Turkey has categorized real estate VAT rates based on the property’s nature and size:
- A modest 1% VAT for residential spaces under 150m2.
- A steeper 18% VAT applies to commercial estates, dual-purpose residential properties, and homes sprawling over 150 m2.
Getting Your VAT Exemption: Required Documents
If you’re hoping to enjoy the VAT exemption, gather the following:
- Your notarized passport copy.
- Translated and notarized version of the same passport.
- Notarized evidence of your overseas address.
- Record of passport transactions from the Turkish Police Department.
- A letter from Turkey’s General Directorate of Immigration, confirming you’re not a Turkish national.
Stay Updated
Tax regulations can be fluid, and while we strive to keep you informed, we recommend reaching out to your adviser at Prestij Consulting for the most recent insights.
