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Introduction

Turkey offers an attractive real estate market for foreign investors, and one of the biggest financial incentives is the VAT (Value Added Tax) exemption. This policy allows eligible buyers to purchase property without paying VAT, significantly reducing costs and increasing potential returns.

This article explains everything you need to know about Turkey’s VAT exemption, including who qualifies, the tax rates, and the application process.

Understanding VAT Exemption in Turkey

VAT exemption enables foreign investors to buy newly constructed properties in Turkey without paying VAT, which otherwise ranges between 1% and 20%, depending on the property size and category. The policy aims to attract global investors and boost economic growth.

Who Qualifies for VAT Exemption?

To benefit from VAT exemption, foreign buyers must meet these requirements:

• Foreign Citizenship: Only non-resident foreign nationals qualify.

• First-Time Property Purchase: The exemption applies only to the first real estate transaction in Turkey.

• Foreign Currency Payment: The purchase must be completed in USD, EUR, or another foreign currency through an international bank transfer.

• Minimum Holding Period: The property must not be resold within one year, or the exempted VAT must be repaid.

VAT Rates in Turkey

VAT rates vary depending on the property’s building permit date, size, and location:

📌 For properties with a building permit issued after April 1, 2022:

• Properties under 150 m² → 10% VAT

• Properties over 150 m² → 10% VAT for the first 150 m², 20% VAT for the remaining area

📌 For properties with a building permit between 2013 and 2022:

• Non-Metropolitan Areas:

  • Below 150 m² → 1% VAT

  • Above 150 m² → 20% VAT

• Metropolitan Areas:

  • Below 150 m²:

    • Land value under 1,000 TL/m² → 1% VAT

    • Land value between 1,000-1,999 TL/m² → 10% VAT

    • Land value above 2,000 TL/m² → 20% VAT

  • Above 150 m² → 20% VAT

📌 For properties in urban transformation or risk zones:

• Below 150 m² → 1% VAT (regardless of permit date)

• Above 150 m²:

  • Permit before April 1, 2022 → 20% VAT

  • Permit on or after April 1, 2022 → 1% VAT for the first 150 m², 20% VAT for the remaining area

Benefits of VAT Exemption for Foreign Investors

✅ Lower Investment Costs: Eliminating VAT significantly reduces the total property price. ✅ Higher Return on Investment: With lower upfront costs, rental yields and resale profits increase. ✅ Encourages Foreign Investment: This tax incentive strengthens Turkey’s real estate sector and attracts international buyers.

How to Apply for VAT Exemption

Foreign buyers must follow these steps to claim VAT exemption:

1. Confirm Eligibility: Ensure compliance with the required conditions.

2. Provide Required Documents:

   • Passport copy

   • Proof of foreign currency transfer from an international bank

   • Turkish tax identification number

3. Sign the Sales Agreement: A notarized contract must specify VAT exemption clauses.

4. Approval & Title Deed Transfer: Once verified, the title deed (Tapu) is issued without VAT charges.

Key Considerations Before Investing

❌ No VAT Refunds: If VAT is mistakenly paid, it cannot be reclaimed. ❌ Resale Restriction: Selling the property within one year requires repayment of the exempted VAT. ❌ Limited to New Properties: The exemption does not apply to second-hand property purchases.

Contact Oznur & Partners Law Firm

For expert legal guidance on VAT-exempt real estate transactions in Turkey, contact our team: 📞 Phone: Call Us 📱 WhatsApp: Chat Now 🌐 Website: Oznur & Partners Law Firm

Conclusion

Turkey’s VAT exemption is a valuable opportunity for foreign investors seeking tax-free real estate investments. Understanding the eligibility requirements and following the correct application procedures will help maximize financial benefits.

For professional assistance, contact Oznur & Partners Law Firm and ensure full compliance with Turkish tax regulations.

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