What is a Real Estate Property VAT in Turkey

How to calculate and determine value-added tax for properties in Turkey?

Real Estate VAT (Value Added TAX) – Turkish KDV in Turkey,

It’s a one-time payment for brand new real estate properties which are paid by the buyer.

3 different rates are applied for value-added VAT rates related to real estate properties. These rates are;  1%, 8%, and 18%. In this article, let’s examine these three different value-added tax rates separately and in detail.

LEGAL AND LEGISLATION ARRANGEMENT
In article 28 of the Value Added Tax Law titled “Rate”; “Value added tax rate is 10% for each taxable transaction, and the Council of Ministers is authorized to increase this rate up to four times and reduce it up to 1%”.

According to this; immovable or real estate properties with a net area of ​​more than 150 square meters are subject to 18% value-added tax regardless of the region and city and, lower square meters are 8% and 1%.

Regardless of the city and region, within the scope of Urban Transformation, namely, within the scope of the Law on the Transformation of Areas Under Disaster Risk, the reserve building area and places designated as risky areas and residential deliveries smaller than 150 square meters in places where risky buildings are located are also subject to 1% value-added tax.

PLACES WHERE METROPOLITAN MUNICIPALITY LAW IS APPLIED

In the cities where the Metropolitan Municipality Law No. 5216 is applied, the size of the house deliveries, the unit square meter value of the land, whether it is within the scope of urban transformation; Conditions such as whether the construction was built as luxurious or first class affect the rate to be applied. Let’s dwell on this issue now.

The land unit square meter value of the land on which the building permit is obtained, which is built-in metropolitan cities as luxury or first class, determined according to Article 29 of the Real Estate Tax Law;

– 8% tax rate for the real estate properties with a land per m2 value between 500 and 1000 TL,

– 18% tax rate for the real estate properties with a 1000 land per square meter value and above,

– 1% tax rate for those  lower than 500 TL land per square meter value other than these,

In order for the houses built in the places listed above to be subjected to a high value-added tax of 8% or 18%, these houses must be in one of the 29 provinces within the scope of the Metropolitan Municipality.

HOUSES UNDER URBAN TRANSFORMATION
Council of Ministers Decision No. 2012/4416 has been implemented since 2013. Within the scope of Law No. 6306 on the Transformation of Areas Under Disaster Risk, the value-added tax will be applied as 1% for the deliveries of residences smaller than 150 square meters, which are newly built in places called urban transformation and in places where risky buildings are located, in the application determined as reserve building area and risky area.

However, foreigners who purchase properties for the first time can get a VAT exemption under qualified conditions you can read the following topic to learn more.

VAT Exemptions For Foreigners Purchasing Property in Turkey