Exemption from real estate tax in Turkey || Important details
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What is the real estate tax in Turkey? What a tax exemption!
Real estate tax, a term applied to each of the amounts collected from investors and real estate owners in Turkish lands according to the specifications and area of their property and the resulting taxes. Real estate tax in Turkey has three types:
Property transfer tax
Value added tax
Annual municipal tax
Some of them accept the exemption, and some do not accept it for whatever reason, and not paying them leads to the non-completion of the sale process. When can I get exemption from real estate tax in Turkey, and what are the taxes that the foreign investor can be exempted from?
Answer: The exemption from real estate tax only applies to value added tax, or as it is known as KDV, so what is this tax? What are the nine exemption conditions for it?
Value Added Tax - KDV
According to the real estate ownership law in Turkey, the value-added tax is imposed on real estate sales for each property exceeding an area of 150 square meters, while it does not include real estate with an area smaller than that.
Its value ranges from 1% to 18%, depending on the location of the property and the construction company, whether governmental or private, and other factors on the basis of which the Turkish government determines the value of the tax for each property.
This tax is not imposed on resale properties in Turkey, but only on properties sold by construction companies for the first time.
The tax is imposed on foreigners and Turkish citizens alike, but what distinguishes foreign investors is that they have the means to avoid paying this tax. How?
Who is the tax exemption privilege limited to?
The VAT exemption law includes both foreigners residing outside Turkey or foreign companies that are not based in Turkey, those are the only ones who are able to benefit from this privilege, while foreigners residing in Turkey do not obtain it because there is proof of their residence there.
What are the conditions for exemption from real estate tax?
For exemption from value-added tax, there are nine conditions:
Anyone wishing to benefit from the tax exemption benefit should not be a resident of Turkey
Applicants for exemption are not accepted if they have resided in Turkey for more than 6 months in the year preceding the application year.
Not having a valid residence permit from the previous year
The absence of a residence or registered address in Turkey, and if he has a registered address, he must cancel it first and then submit the application.
The exemption from real estate tax applies to new properties only and does not include resale properties.
To obtain exemption from real estate tax in Turkey, the property must be of a residential or commercial type, such as apartments, offices, shops and workplaces, as the tax law does not apply to land and agricultural land.
Payment in foreign currency, and confirmation of this through bank receipts or a customs document in case the money was transferred to Turkey in cash.
Not selling the property benefiting from the tax exemption before the lapse of a full year.
Preparing the documents required to obtain exemption from real estate tax in Turkey in order to avoid losing this advantage.
What are the documents required to obtain a tax exemption?
To obtain a tax exemption certificate, the investor must prepare a file that includes:
A translated copy with the notary public (Turkish notary) of the applicant's passport
A translated document confirming the applicant's residence outside Turkey
Turkish tax number
Official power of attorney in case the investor will appoint a lawyer or real estate agent to conduct the transaction
It is worth noting that any deficiency, error or forgery in these documents will deprive the investor of the right to obtain exemption from real estate tax in Turkey, and thus lose this privilege and have to bear additional burdens estimated at 1% to 18% depending on the property.
That is why you should be careful about preparing the file, or hiring a real estate agent to help you prepare it in order to avoid pitfalls.