Conditions for tax exemption in Turkey and who gets it

Turkey gives foreign real estate investors a lot of facilities, and offers many privileges, as it abolished some restrictions imposed on them, with the aim of increasing the number of investors and motivating them to buy real estate, among these facilities is the tax exemption in Turkey on real estate, under which the investor who wants to buy a property in Turkey is exempted from paying some of the fees incurred by the state, this exemption aims to enhance the investment movement in Turkey, by easing the burden of paying taxes imposed on them.

What are the taxes imposed on real estate in Turkey?

Turkey obliges every investor and property owner on its territory to pay taxes by specific dates to government tax authorities. The real estate tax in Turkey may mean the following:

1. One-time property taxes, which are :

• Real estate registration tax, or the so-called title deed tax: Its value is 3% of the value of the property that is registered in the title deed, and these expenses are paid equally between the seller and the buyer, unless the parties agree otherwise, such as if it is agreed that the buyer pays the tax The real estate is fully paid, or the seller has to pay it in full.
• Value-added Tax: This tax is paid once when buying a property in Turkey, and its value ranges from 1% to 8%, and may sometimes reach 18%, and is determined by the type of property, its area, location, and other factors. This value is not calculated from the total area of ​​the property, but from the net area, and the exemption from value-added tax includes foreign investors not residing in Turkey, and foreign companies that are not based in Turkey.

2. Annual taxes, including :

• Annual property tax: Its value is 2 per thousand of the value of the residential property located in major cities, and its value for housing outside major cities is 1 per thousand.

As for the real estate tax on shops, offices, and other real estate, the rate is 4 per thousand in major cities, and 2 per thousand outside major cities.

• Earthquake and natural disaster insurance fees: where the property owner pays an annual amount, to specialized companies, approved by the Turkish government, and this amount is determined according to specific criteria, such as the age of the building, its area, and so on.

Is there a tax exemption on real estate in Turkey?

The tax exemption in Turkey includes value-added tax when buying a property, which amounts to 18% for commercial properties (shops - offices), and between 1%, 8%, and 18% for residential properties.

The property tax exemption law in Turkey does not include property transfer costs, annual taxes, service fees, and monthly subscriptions, as it is only limited to value-added tax.

Who is entitled to get a tax exemption?

In addition to those who are exempt from value-added tax, namely "foreigners not residing in Turkey, foreign legal entities that are not based in Turkey, and Turks not residing in Turkey", there are other tax exemptions, such as:

• Those who are exempted from the real estate tax who own a single dwelling that does not exceed an area of ​​200 square meters, do not have any other winter house, or a summer residence, and do not have any share in another dwelling.
• The Turkish law also granted the possibility of exemption to special social groups provided that they own only one home, regardless of its area: housewives, widows, orphans, the disabled, relatives of warriors, martyrs, and retirees.

What are the properties covered by the exemption?

The real estate covered by the tax exemption in Turkey: Newly built real estate, whether it is residential, such as apartments, villas, or commercials, such as offices and workplaces.

As for old real estate, it is not covered by the exemption decision, as well as agricultural lands, and other types of land, the exemption decisions do not apply to it.

Conditions for tax exemption in Turkey

As for the conditions for tax exemption in Turkey, foreign investors wishing to benefit from the exemption from value-added tax must submit an application to the Turkish tax authorities, after securing the following conditions:

• The foreign investor must not be residing in Turkey.
• The absence of any foreign company entities headquarters in Turkey.
• Not residing in Turkey for a period of more than 6 months during the previous year.
• Not having a valid residence permit in Turkey from the previous year.
• There is no registered address in Turkey.
• The exemption from Value-added tax (VAT) includes only new properties, while old properties are not included in the exemption.
• The real estate covered under the exemption from VAT is residential buildings (such as apartments, villas, etc.), offices, or workplaces. Other types of real estate such as land or agricultural land are not within the scope of this concession.
• Bank transfers that prove that the funds paid come from external sources (from outside Turkey), or by a customs declaration document in the event of cash transfer to Turkey, noting that the payment for real estate investment must be in foreign currency.
• It is not possible to sell the property benefiting from the tax exemption again within one year.
• The investor must prepare the following:

1. A translated copy of the applicant's passport.
2. A translated copy of a document certifying that the applicant lives in a country other than Turkey.
3. Real estate sale agreement.

1. Turkish tax number.
2. Official power of attorney, if the investor is to delegate a lawyer to follow up on the application.

Note: The first, second, and fifth documents can be brought from Turkish embassies/consulates, or notary centers in Turkey. As for the third and fourth documents, there is no need for any official translation of them.

How to get a tax exemption when buying a property in Turkey?

Those who are exempt from real estate tax should go to the Title Deed Department in the municipality to which the property belongs, to apply for an exemption from the real estate tax, and they can also recover what they previously paid as real estate tax when they prove their eligibility for the exemption so that these funds can be recovered within 5 years from the date of submitting an application exemption.

As for the documents required to obtain a property tax exemption, they are:

• A bank receipt proving that the money has been transferred from outside Turkey to one of its internal banks, or an official document proving that the amount was entered through a Turkish airport, provided that these amounts are either in US dollars or euros.
• A document proving residence outside Turkey, by presenting an address for the person concerned, officially certified outside Turkey.
• Visit the Immigration Department in order to obtain a paper proving non-residency within Turkey for a period of 6 months.
• Go to the Public Security Directorate to obtain a document for the movement of entry and exit to and from Turkey.

After getting these official documents, a request can be submitted to the Turkish Tax Department to obtain a value-added tax exemption.

How does Gars Consulting company help you get tax exemption?

Since it’s necessary to have a Turkish lawyer when applying for tax exemption - in order to prevent the buyer from making mistakes, which could lead to losing his right to tax exemption, Gars Consulting Company, through its professional and specialized team in legal advice, provides various services for its clients in everything related to tax exemption, through its specialized legal staff, which includes a group of lawyers with experience in the field of getting official and legal documents and obtaining tax exemptions.

Edited by Gars Consulting Company ©

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