The tax exemption when buying real estate in Turkey decision was issued in February 2017, and this decision provides for exempting foreigners who do not reside in Turkey, and Turks residing outside Turkey for a period of 6 months or more, from the value-added tax (VAT), which is a tax imposed by the government on all goods and services. Its rate is 18% for commercial properties, and it ranges between 1% - 8% - 18% for residential properties. For example, if the net area of the residential property is more than 150 square meters, then the value added tax is 18% of the price of this property, but if the net area of the residential property is less than 150 square meters, the value added tax ranges from 1% to 18%, where the type of property, its area, level of construction, and the price per square meter all play a role in determining the value of the tax.
The issuance of the tax exemption decision comes within the facilities and contributions made by the Turkish government with the aim of encouraging the purchase of real estate in Turkey. Among the facilities provided by the Turkish government also is granting Turkish citizenship to investors when buying a property or group of properties in Turkey with a value of $250.000 or more.
To know more about the conditions for obtaining Turkish citizenship: Turkish citizenship
We at Right Home have a legal team to help you to complete the Turkish citizenship procedures and ensure that no mistake occurs, and to extract Turkish passport within only 90 days with zero expenses! This comes within the after-sales services that we provide to our clients, which we are distinguished by in terms of speed and reliability.
What are the conditions for tax exemption when buying a property in Turkey?
- The buyer of the property must be a foreigner who does not reside in Turkey, or a Turkish resident outside Turkey for a period of 6 months or more.
- The property must be new.
- Not to sell the property for one year from the date of purchase.
- That the property be purchased in a foreign currency, Dollar or Euro.
- Transfer the amount of the property purchase from a bank outside Turkey to a Turkish bank, or enter it through a Turkish airport.
What documents are required for tax exemption when buying real estate in Turkey?
- A bank receipt of the sums transferred for the purchase of the property in Turkey or a document from the Turkish Customs Administration proving that the amounts entered from one of the Turkish airports.
- A document proving the buyer's residence outside Turkey.
Does the tax exemption include exemption from ownership transfer costs?
No, the tax exemption does not include exemption from the costs of transferring the ownership of the property or other taxes and fees, it only includes an exemption from the value-added tax, which amounts to 18%.
What happens if the property is sold before the lapse of one year after its purchase?
In case that the property is sold before the lapse of one year after the purchase, the tax is paid with a late interest calculated according to the deferred interest rate.
What other taxes are paid when buying a property in Turkey?
- Land Registry Tax
This tax is paid when registering the title deed (Tapu) in the Real Estate Registry Department in Turkey.
Its rate is 4% of the property price registered in the sales contract, and the tax is usually paid equally between both the seller and the buyer, as each party pays only 2% of the tax value.
- Municipal tax on real estate in Turkey
Turkish municipalities impose on real estate located within the area served by the municipality an annual fee of 0.03% of the property value, and this tax is paid in exchange for the services provided by the municipality.
- Earthquake tax
It is an annual tax that the property owner in Turkey pays to insure his home against natural disasters and earthquakes, and it is estimated as $2 per square meter of the property's area.