Recently introduced by an omnibus bill and approved by the Turkish parliament, VAT-free residential sales of housing to foreigners starts tomorrow. The move is expected to drive the Turkish real estate sector
As the Value Added Tax (VAT) discount on foreign residential sales in Turkey is set to be implemented tomorrow on April 1, representatives from the sector pointed out that housing sales are gaining momentum and have entered a promising period that will be boosted with the VAT discount, adding that the security of the real estate market will have a positive impact on mobility.
Chairman of the Construction Contractors’ Confederation (İMKON) Tahir Tellioğlu stated that İMKON regards the application of the VAT discount on foreign residential sales as a positive development for the sector, suggesting that this practice will trigger mobility in the real estate sector.
Stressing that the VAT discount will be most effectively introduced through İMKON’s participation in international fairs, Tellioğlu said: “We consider the government’s recent steps in the sector positive. If governmental support is increased, returns will also increase.”
The chairman went on to speak about the effects of the move on real estate security, saying that developments in the sector must be implemented in a way that will attract the attention of the international market.
Asserting that the application of the VAT discount will enable citizens to be homeowners with purchases based on square meterage, Tellioğlu noted that according to the duration of the housing projects, which will cover periods of either 24 or 36 months, security holders will either turn their securities into cash or an investment, buying a house at the end of the specified period. The chairman went on to say that in order to attract more international investors, the deadline for the application should be lifted.
‘Market is stable and gaining momentum’
Ali Taylan, the chairman of the Turkish Real Estate Advisory Agencies’ Federation (TEMFED), said that there is no negative situation in the housing market at the moment and that decisions on issues such as reducing title deed fees have had a positive effect on the market.
Stressing that the VAT exemption for foreign residential sales will increase sales, Taylan said, “The positive effects of this decision will be more evident considering the fact that we are approaching the summer months, when housing sales gain momentum.”
Taylan underlined that there is a number of houses on the market in Turkey that meet foreign demands in terms of quality and quantity, adding that Turkey is one of the most important countries in Europe regarding housing production.
Real Estate Consultant Gülşah Gökşen also said that the VAT discount will be important in terms of shorting the housing stocks, pointing out that the recent discount on title deed fees has also revived the market.
Noting that the real estate security method is a better sales method than installment sales, Turan said, “This practice will also lead to the revival in the second-hand market. The fact that TOKI is a pioneer in this area will also have a positive effect on sales in the private sector.”
General stipulations of the deal
Foreigners and Turkish citizens living abroad for more than six months will not pay VAT on their first commercial and residential purchases, on the condition that they pay the sale price in foreign currency from abroad. Those who buy commercial or residential space in Turkey by taking advantage of the VAT exemption will not be able to sell their properties for a minimum of one year, while said buyers who sell their properties prior to the one year stipulation will be responsible for paying the remaining taxes on the property.