Opportunity for Real Estate Acquisition in Turkey
Do Not Miss That Limited Time Tax Offer Has Presented By the Republic Of Turkey You may purchase a residential building or business premises in Turkey by not paying VAT until 31.03.2018. A recent tax law amendment which exempts the residential buildings (such as houses) or business premises (such as offices) sales from VAT to the selected buying groups has already passed into law on 23 February 2017 and it has also published in the Official Gazette on 08 March 2017. Who will actually benefit from this limited time opportunity? Not everyone but only the qualified real or legal persons are eligible to benefit from this exclusive tax advantage. Those beneficiaries are listed as below; 1. The Turkish citizens who reside abroad more than six months by having a legal work or residence permit. 2. The Real person foreigners (individuals) who do not legally reside in Turkey. 3. The Legal person foreign entities (such as companies and corporations) which legal head offices or business centers are not located in Turkey and those do not generate income or profit in Turkey by having a workplace in Turkey and/ or by employing a permanent representative in Turkey. Then, when regarding the legal conditions to benefit from this law, we understand that the Turkish citizens who live in Turkey are not going to be able to benefit from this exclusive opportunity while the privileged buyers are (both Turkish citizens reside outside of the country and the foreigners). Then, it is understood that the Turkish Parliament (actually the Turkish Government) took an legal initiative for both boosting the construction sector and also for financing the balance of payment deficit of the country by offering a lucrative tax advantage by exempting VAT on sales of residential buildings or business premises just for the eligible buyers who are ready to bring currency to the country. By the way, it is being predicted that; this initiative may bring about 10 billion US Dollar currency to the Turkish economy. Thus, when regarding that the VAT rates related to the sales of the luxurious residences and the houses classified as first class constructed buildings is between 8-18 % depending of their square meter land property tax values, besides regarding also that the sales of the business premises are only subject to the flat rate of 18 % VAT, then, this law means, the eligible buyers could purchase a house or office in Turkey as much as 8-18 % cheaper as compare to a non-eligible Turkish citizens. So, when regarding the tax savings to be realized, it seems as a very good opportunity to make extra money by first purchasing an eligible residence and/or office, then, by selling it after the legal waiting period passed. But on the other hand, the law has some legal conditions and the prospective eligible buyers should meet or fulfill those legal conditions stated below to fully enjoy from that VAT exemption. Those legal conditions are as below: The VAT exemption would only be applied on the first sales of the newly constructed residential buildings or business premises. 1. The price of the residential buildings or business premises purchased shall have to be transferred to Turkey as in a foreign currency. (There is no specific currency stated in the text of the law, then, every kind of convertible currency seems welcomed.) 2. The buyers shall not sell the purchased residential buildings or business premises at least for one year. If it happens, the buyers would have to pay the VAT not paid before and the deferment interest rate would be calculated. Besides, if the seller applies the VAT exemption to the non-eligible immovable or to a noneligible buyer, both seller and buyer would jointly and severally be liable from the paying of VAT unpaid before, tax penalty as much as the tax amount and the late payment fee. In addition, please be also informed that, most of the luxurious houses, residences and offices in Turkey are being priced and sold by using a foreign currency (mostly US dollar or Euro). Thus, if the foreigners buy a house and if they sell this house only after holding its property for one year and one day, even if the price of the immovable would stay the same level, they would get at least as much as 8-18 % gross profit on that trade just because of the VAT free purchasing advantage. Besides, the buyers, of course, would be able to rent those immovable and get rental income during this legal waiting period. It is of course that the eligible buyers would pay income tax as much as 15-35 % over the net capital gain and / or rental income, but they would still have significant profit on that business when regarding that the interest rates are still negative or very low at the EU member countries because of global quantitative easing policy. Please be also noted that, the title deed fees related to the housing purchases are also discounted from 20 in one thousand to 15 in one thousand for the real estate transactions that would be completed until 30 September, 2017. Then, we think this is also another reason for the eligible buyers to be quick for that opportunity. The VAT exemption law has already come into effect starting from the very first day of April, 2017 and it will last until March 31, 2018. Then, we kindly ask for you to inform your Turkish citizen customers who reside outside of Turkey and /or your local non-Turkish customers who may have interested in purchasing a residential building or office in Turkey just for the sake of significant capital gain.
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