During the past three years, foreign investments in real estate have witnessed a great growth in Turkey, and there is no doubt that Arab investors are at the forefront of this scene.

But based on our experience, we noticed that many Arab investors are not well aware of the privilege they enjoy: namely, the reduction of the value-added tax on foreign real estate investors, which usually exceeds 18%.

Foreigners who do not reside in Turkey and foreign companies whose headquarters are not located in Turkey can benefit from this privilege, and in most cases Turkish real estate companies apply this tax reduction to their sales contracts, which means that their foreign investor clients automatically enjoy this reduction as well. .

However, in some cases, real estate companies may not take this reduction into account (either forgetting or misapplying the rules for reducing the value-added tax), and in such cases, foreign investors can demand a refund of the value-added tax that they paid in error.

Of course, the process of recovering these funds may require an official request and some documents that a Turkish lawyer is suggested to follow.

What are the conditions for enjoying a reduced VAT?

  • This procedure includes only new properties, not used (old) properties.

  •  Only available for residences or offices / workplaces, as for lands or agricultural lands, this procedure does not apply to them.

  • Payment of the property price must be in a foreign currency to an account in a Turkish bank with a transfer from outside Turkey, and there are also some detailed rules regarding the payment plan.

  • The tax-cut property cannot be resold until a year after its purchase.

  • There are some detailed criteria regarding the size and location of the property .. According to these criteria, the value-added tax decreases from 18% to 8% or 1%.

Notice:

There is a frequently asked question that concerns foreign real estate investors who seek to acquire Turkish citizenship through investment:

Does the value of the required investment ($ 250,000 as a minimum) include VAT or not?

The answer is "no".

The foreign investor depends on the selling price only, without the VAT.