Over the last twenty years, Turkey has revolutionised many of its industries to become a global player. Tourism has seen a massive boost since the dull figures of the nineties. Imports and exports are at an all-time high, but one industry that underwent a total overhaul is the real estate market. Low prices have always been the primary lure for foreign buyers, but Turkey continues to attract interest with huge incentives of which the latest one is an 18% tax exemption.
What was the old law regarding property VAT in Turkey?
Before 2013, VAT did not exist when buying property. Then a new law applied 1% VAT to resale properties and 18% VAT to new or off-plan developments. Even though, the tax is levied against the consumer, liability for payment of it belongs to the seller, as is the case of most tax levied products.
So what is the new VAT property Law?
In February 2017, the Turkish parliament approved a new law to abolish the 18% tax rule for foreign buyers of property in Turkey. This rule also applies to Turkish people who have lived and worked abroad for six months. The customer will see the 18% exemption in the actual sales price and on their contracts. However, there are terms and conditions.
- It only applies to the first purchase of property or offices. Any other purchases after that are still liable for 18% tax.
- The buyer must use foreign currency during the transaction
- The new owners must keep the property or office for at least one year after the date of purchase
Istanbul takes Advantage of the VAT Discount
The new law is a huge advantage for both buyers and sellers, but one area where the incentive was gratefully received was Istanbul. The city that is the largest in Turkey is experiencing a massive building spree. Old, inhabitable properties are being demolished, and all-inclusive apartment complexes are replacing them, as demand grows higher for investment in one of the world’s most prominent cities.
New, modern, and trendy homes featuring the latest in architectural design are catching the interest of foreign buyers and investors all over the world, but other advantages are also luring them including…
- Lower prices for off plan property
- Payment terms structured over a period of 1 to 2 years
- A favourable exchange rate for the foreign buyer from their home country currency
- Low prices providing a favourable long term ROI
Add these incentives to the 18% VAT exemption, and it is the icing on an already fruitful cake. According to the Turkish Statistics portal, Istanbul is the most popular place for foreigners to buy property and all these incentives are just opening up a buyer’s market to anyone with ready cash.
However, it does not stop there…
Another new law recently introduced says buyers of property worth more than one million USD who keep them for at least three years are also eligible for Turkish citizenship. For business investors, there is also the turquoise card system, which grants working and individual citizenship rights. For anyone who is thinking of buying or investing in the real market estate of Turkey, contact us here to find out which deals and discounts you can tap into.