How to Claim VAT Exemption when Buying Real Estate in Turkey

One of the benefits of investing in real estate in Turkey is the exemption from value-added tax (VAT-KDV). The system offers various benefits, attracting more and more investors to the country. Since the exemption of VAT on property purchases started in April 2017, property sales in Turkey increased remarkably.

If buying a property in Turkey is on your agenda, you can take advantage of not being charged for VAT. However, there are some rules you need to know. Here is a guide to reclaiming VAT on foreign purchases.

An Overview of the VAT Exemption in Turkey

The annual property tax and VAT may depend on the unit size and location. In 2024, tax rates are 1%, 8%, or 20% per sqm. Previously, all foreign and Turkish citizens would pay VAT on buying a house. Now, foreign and Turkish citizens can benefit from reduced rates and exemptions.

Given that the applicants meet the criteria below, they can buy multiple properties and avoid paying taxes in Turkey.

• Applicants may have a residence permit but they must not have been residing in Turkey for 6 months. Businesspeople and scientists who stay in Turkey for a task, work, or project can still benefit from tax exemptions even if they exceed 6 months of stay.
• Buyers must remit the property’s payment in foreign currency.
• Buyers must not sell/transfer the property within a year. If they do, they have to pay an overdue interest and the tax rate.
• Turkish citizens must have lived and worked abroad for the last six months.
• Applicants who work with any establishment or institution in Turkey are subject to VAT.
• Tax exemption is only valid for first-hand properties purchased from the construction company. Secondhand properties are subject to VAT charging.
• Both commercial and residential properties are fit for VAT refunds. But, they must have a building certificate and be ready for use. Additionally, land buyers are subject to tax.

How to Apply for a Property VAT Exemption in Turkey?

Before the sales invoice, the buyer has to pay at least 50% of the sales price to the seller. Later, they must complete the payment in foreign currency in a year. If they don’t do so, both the buyer and seller must pay the tax. If the seller proves that he/she didn't cause the delay, they do not pay the tax.

Once the purchase is successful, buyers can apply to a tax office for a refund. At this stage, they must sign a letter of undertaking. They must also bring the documents below:

Exemption from property VAT for Turkish citizens:

• Documentation of abroad residency for at least six months
• Work permit

Exemption from property VAT in Turkey for foreigners:

• Copy of passport issued by the country of residence
• Copy of Turquoise card if the applicant lost Turkish citizenship before
• Entry-exit records from the police department
• Title deed of the property

If an institution with no office in Turkey / no profit from Turkey is applying for an input tax return:

• Apostilled documentation confirming the continuing activities in the home country of the institution
• Documentation that the purchased business center is not in Turkey and makes no profit from Turkey

The payment method is also important. To benefit from tax exemption, applicants must send the purchasing price to a Turkish bank and submit the debit receipt to the relevant authority. Meanwhile, they are subject to the following conditions:

• If the applicant pays with a credit card or loan, they must submit documentation to a Turkish bank to confirm that the money is from a foreign bank.
• If the applicant brought cash from abroad, they must bring a written statement from the Customs Administration.

Claim Expert Guidance

VAT exemption when buying Turkish real estate offers significant advantages for both foreign and Turkish citizens. But, understanding the VAT return procedure is essential. With the right guidance, you can benefit from VAT exemption simply.

Along with the before and after-sales services, TEKCE Real Estate provides legal consultancy by lawyers. Our team of experts will ensure a smooth Turkish real estate buying. Call us now, and get expert guidance for tax benefits.

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