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VAT Rates in Turkish Real Estate Are Changed

VAT Rates in Turkish Real Estate Are Changed

VAT rates in Turkey are changing! Good news for those who want to buy a house in Turkey! There is a recent development about the Turkish real estate sector! Housing prices are falling. In the VAT system in housing, a new model comes into play that will relieve buyers, investors and the sector.

According to the new system, there will be a dual VAT system for houses bigger than 150 square meters. So, 1-8 percent VAT will be applied for up to 150 square meters, and 18 percent VAT will be applied for 5 square meters above.

END OF THE SQUARE METER SCAM | NEW ERA IN THE TURKISH REAL ESTATE

At the official meetings, the authorities have pointed out that the illegal practices such as registering the flats smaller in order not to pay 18 percent VAT. In the meetings, the Ministry of Finance has put all the demands on its agenda, from tax reductions for residences over 150 square meters to lowering the fee, which is 20 per thousand for the first residence.

Consequently, there has been a consensus on the gradual VAT rate. Thus, the square meter scam, which is one of the important problems in the market, will come to an end. Furthermore, the new system will encourage the usage of the net square meter of the house in the projects, sales and title deeds.

HOW WILL THE NEW VAT SYSTEM WORK?

In the current practice, the VAT system is at a rate of 1-8 percent up to 150 square meters. There is 18 percent VAT for residences over 150 square meters. When a residence is 149 square meters, 1-8 percent VAT is valid. While it is 151 square meters, this rate rises to 18 percent.

VAT RATES WILL VARY BY THE DISTRICTS

VAT in housing varies from 1 to 8 percent, depending on the district. In house sales, VAT is only applicable for new houses. For this reason, VAT reduction in housing does not include pre-owned housing sales.

For example, when we talk about the capital of Turkey, a flat in Cankaya and a flat in Mamak have different VAT rates. That is why  VAT varies between 1 and 8 percent.

This will not change in the new arrangement. 1 percent VAT will continue to be applicable in urban transformation, building cooperatives and TOKI (The Housing Development Administration of the Republic of Turkey).

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