Eliminating VAT Will Attract International Property Investors
Turkish Parliament has approved the versatility law, which provides an exemption of value added tax (VAT) of 18% for foreigners investing in real estate in Turkey. The law was passed by parliament on 23 February. This law will also valid to Turks living and working abroad for longer than six months. Foreigners will not pay VAT for their first houses or offices in Turkey. There is only one condition here for them. They should make their acquisition payment in foreign currency and do not sell their properties for at least one year after the purchasing. Turkey also promised to grant citizenship for foreigners, who buy at least 1 million USD of real estate and hold at least three years, with a new decree issued in the Official Gazette on 12. January. According to official data issued by the Turkish Statistical Institute (TUIK), property sales in Turkey increased by 12.8% in the first month of 2017 compared to the previous year. It is aimed to increase the sales of foreign real estate in Turkey with this VAT discount made for foreigners.
Real estate sales are increasing every year in Turkey, which is a center of attraction for foreigners with its natural beauties and life prosperity. The number of foreigners who love Turkey and want to live here is increasing day by day. Real estate sales to Turkish citizens have also increased considerably in recent years. Demand for new and prestigious real estate has attracted the attention of the state.
VAT arrangement was made in the real estate with the decision of the Council of Ministers of the Grand National Assembly of Turkey. It was decided to apply 8% VAT for those construction projects which are been built between 1 January 2013 and 31 December 2016. This application will be valid for the delivery of the houses with the tax value per square meter between 500 TL and 1.000 TL. Within this scope, VAT rate will be applied on the houses delivery date to be applied when delivering houses, which is the square meter tax value is 1.000 TL and over, will be 18%. The VAT rate will be 8% for the residential projects that have a tax value between 1.000 TL and 2.000 TL per square meter in residential projects which received building licence after 1 January 2017. 18% VAT will be charged for the houses that have a tax value over 2.000 TL per square meters. With the arrangement made in September, the VAT for houses with 18% VAT rate was 8% until the end of March. This period was extended until September 2017.
With this new arrangement, Turkish citizens who want to be homeowner are expecting serious discounts when they buy real estate.
Foreigners will not Pay VAT while Buying a Property
It is easier for foreigners to invest in our country and get citizenship. Foreigners who are exempted from VAT denomination in the property may be homeowners in Turkey with big discounts. As is wellknown, foreigners investing 1.000.000 USD can get Turkish citizenship immediately. Foreigners who buy real estate worth less than 1.000.000 USD may obtain residence permit for 1 year and after 5 years of permanent living in Turkey submit an application for citizenship.
Foreign investors will not pay VAT amount while purchasing residential or business premises. A foreigner, who have invested 1.000.000 USD, can be granted a Turkish citizenship. Now a new application is introduced to make it easier to invest. Resetting VAT will be reflected in prices. Under these conditions, the recipient will benefit directly from this practice.
In previous weeks, a foreign citizen who has invested USD 1,000,000 has been granted citizenship. Foreigners buying a real estate in Turkey will not pay VAT amount with the new decision of the Council of Ministers. It is a great opportunity for foreigners who are increasingly interested in Turkey and investing here. It is expected that there will be a serious decrease in property prices with this new decision. Accordingly, when construction companies sell a business or residence to a foreign real person or company, the VAT of 18% will be exempted.
Real estates are valued with the sale of housing is increasing every year in Turkey. It is profitable to invest in real estate in a place that does not lose any value, but is constantly valued.
In addition to all these things, VAT of 18% went down to 1 percent for products such as combi boilers, glass balconies, radiators, bathtubs, shower stalls, shower cabins, kitchen cabinets, sinks. Discount is expected to be 4.500 TL discount at a property price of 300.000 TL. This discount is expected to be reflected as a 1 to 1.5% decline in new real estate prices. While some of the products used in the new properties sold as furnitures are subject to VAT recalls, some are not. The criterion here is that the used furniture should be removed and suitable or not suitable for use in another house. For example, VAT refunds are not made in houses under 150 square meters sold together with refrigerators, ovens, hoods, dishwashers, furniture, cloakrooms, televisions, chandeliers, curtains. In other words, the movable goods are treated with 18% VAT.