Buying a property in Turkey, or what is known as real estate investment in Turkey, has become a golden opportunity for those who want to live in Turkey or profit from investment, especially with benefits such as real estate value tax reductions and obtaining Turkish citizenship for those who buy a property for an amount of at least 250.000 USD. To make Turkey, especially Istanbul, the focus of attention for investors who want to profit or who are looking for a suitable place to live
After all these developments, the Turkish government has abolished the real estate value tax on property sales to foreigners to attract more international investors. The VAT exemption law was approved by the Turkish Parliament on April 1, 2017.
According to the new law, some Turkish citizens residing outside Turkey and foreign citizens are exempted from paying real estate value tax on the condition that they obtain new real estate from the construction company.Those who do not meet the requirements will be required to pay taxes.
Types of real estate taxes in Turkey
One-time property taxes
1- Real estate title deed tax
This tax is paid when the title deed is registered in the Real Estate Registry Department in Turkey, the real estate month as it is called in some countries, and it is paid only once when selling or buying the property, and it is paid by both the property owner and the buyer equally, that is, each of them pays 2% and its total value is 4 % of the property value.
2- Value Added Tax
This tax is paid once when buying a property in Turkey, and its value ranges from 1% to 8% and sometimes reaches 18% and is determined according to the type of property, its area, its location and a number of other factors. This value is not calculated from the total area of the property but from the net area, thanks to Exemption Law for foreign investors, they are exempt from paying this tax.
Annual property taxes
1- Municipal tax
These taxes are paid annually to the municipality of the area in which the property or facility is administratively affiliated to the municipality’s borders, and they are paid through the municipality’s website, or by money order, and are paid on specific dates at specific rates that change according to the change in the price of the property, and these taxes are paid in exchange for many services provided by the municipality.
Earthquake and natural disaster insurance fees: where the owner of the property pays an annual amount of money to specialized companies approved by the Turkish government, and this amount is determined according to the criteria, including the age and area of the building.
2-Monthly property taxes
These taxes are imposed on residents of residential complexes in Turkey in return for these complexes providing various and various services, such as swimming pools, sports clubs, security and cleaning services, and they are known in Turkey as “returns.” The percentage of this tax varies from one real estate complex to another according to the services and features it provides.
Conditions for exemption from real estate tax in Turkey
There are some conditions that must be met when applying for an exemption from real estate tax, which are:
-The investor should not be residing in Turkey.
-The person applying for the exemption must not have resided for more than 6 months in Turkey during the past year.
-The applicant should not have a valid residence permit in Turkey from the previous year.
-The applicant should not have a registered address in Turkey.
-The foreign company entities shall not have a main headquarters in Turkey.
-Paying the value of the property in foreign currency, and the money paid must come from outside the country exclusively, either by bank transfer or a customs declaration document in case the money is transferred to Turkey in cash.
-The property must be new. Old properties are not covered by the exemption.
-The real estate covered by the exemption must be limited to residential buildings (villas, apartments and residential units), and similar commercial real estate (workplace offices). As for agricultural lands and other types of real estate, they are not included in this exemption.
-The real estate benefiting from tax exemption shall not be sold again for one year.
-The investor must prepare some papers and documents:
-A translated copy of the investor’s passport.
-A copy of a translated document proving the investor’s residence outside Turkey
-Turkish tax number.
-Real estate sale agreement.
-In the event that the owner of the property fulfills these conditions, he must go to the Tapu Department in the municipality to which the property belongs, and submit a request for an exemption from the real estate tax, and they can also recover the previous taxes they paid when proving the eligibility to exempt them from these taxes.
Tax exemption certificate in Turkey
After the investor has secured all the required documents and papers and fulfilled all the conditions, and followed all the necessary steps, to benefit from the tax exemption, he must apply to the Turkish tax authorities, in order to obtain a “Tax Exemption Certificate”.
What properties are covered by tax exemption in Turkey
In talking about real estate taxes, it is necessary to mention the real estate covered by the tax exemption, such as residential buildings, apartments, villas, housing units, commercial real estate licensed from public offices and workplaces, and this exemption is only for newly built real estate, while old real estate is not included in the exemption decision, as well as agricultural land and other types of lands, exemption decisions do not apply to them.
What are the categories for exemption from real estate tax in Turkey
As for the relevant category of this exemption, they are “foreigners not residing in Turkey, foreign legal entities that are not based in Turkey, and Turks not residing in Turkey”, these are entitled to benefit from the tax exemption decision.
Therefore, as we have seen, the Turkish government is working to attract foreign investors through the great facilities provided by the Turkish government.
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