Turkish law eliminating VAT for foreign property buyers raises sector’s hopes for future sales
ISTANBULTurkey’s property sector has welcomed a new law that allows the introduction of value-added tax (VAT) exemption for foreigners who make real estate investments in the country, speculating that the sales to foreigners would soar.
The law, which was passed in parliament late on Feb. 23, will also be applicable to Turks who have been living and working abroad for more than six months.
“Tax exemption for foreigners who buy houses in Turkey is a very wise move. This will give a serious boost to the sector,” said Nazmi Durbakayım, the head of the Istanbul Constructors’ Association, as quoted by state-run Anadolu Agency.
Ali Ağaoglu, the head of the Ağaoglu Group, one of the largest construction firms in Turkey, agreed with the views of Durbakayım, stressing the move was in line with practices in other countries and was very positive for the sector.
He said foreign demand for properties in Istanbul and the Black Sea region were very high, adding that a further increase would be the case with the new law becoming effective.
Foreigners will not pay VAT for their first offices or houses in Turkey under the condition that they make their acquisition payment in foreign currencies and do not sell their properties for at least one year after the acquisition.
Turkey also vowed to grant citizenship to foreigners who buy properties worth at least $1 million and keep them for at least three years, according to a revised decree that was published in the Official Gazette on Jan. 12.
Yasin Tatlıdil, one of the founding partners of Agency Gayrimenkul, said these moves would trigger sales in a dramatic manner.
“A foreign investor who invests $1 million in Turkey’s real estate sector now has the chance to acquire Turkish citizenship. This decision has already moved up foreign sales. The removal of VAT for foreigners will increase the sales much further,” he said, adding that a serious foreign currency inflow into Turkey would be achieved.
Reaction on ‘equality’ basis
The new law has prompted stirred reaction from a number of opposition deputies due to its “contradiction to the equality principle.”
They stressed that the same rule must be applied to Turkish nationals living in the country too.