As Uzunpınar & Tüfek International Law Firm, we provide our clients with comprehensive and reliable legal consultancy in the fields of real estate acquisition by foreigners in Türkiye, real estate investments, VAT exemption practices, and foreign investor law. For foreign nationals wishing to purchase real estate in Türkiye, one of the most significant financial advantages is the VAT exemption for foreigners in the acquisition of real estate, which is applied provided that certain conditions are met.

The Value Added Tax (VAT) exemption is an important incentive that enables foreign investors to be fully exempt from VAT rates of 1%, 10%, or 20% when purchasing a first-hand residential property or workplace in Türkiye. This exemption is regulated under Article 13/ı of the Value Added Tax Law No. 3065 and aims to increase foreign currency inflow into Türkiye and encourage foreign investment.

However, in practice, failure to fully or correctly meet the conditions for VAT exemption, payment of the sale price not being made in foreign currency, incorrect declarations at the land registry, or the sale of the property before the expiration of the prescribed holding period may result in the cancellation of the exemption and retroactive VAT assessment. Therefore, the VAT exemption process in real estate acquisition by foreigners must be carried out carefully and in full compliance with the law, from the title deed stage to the payment method.

FREQUENTLY ASKED QUESTIONS (FAQ)

1. What is the VAT exemption for foreigners in the acquisition of real estate?

The VAT exemption for foreigners in the acquisition of real estate is a tax advantage that allows non-resident foreign nationals or Turkish citizens residing abroad to purchase a first-hand residential property or workplace in Türkiye without paying VAT. This exemption applies only if certain conditions are met and is not automatic.

2. Who can benefit from the VAT exemption?

The following may benefit from the VAT exemption:

• Foreign nationals who are not resident in Türkiye,
• Turkish citizens who have been residing abroad for at least 6 months.

Foreigners deemed to be resident in Türkiye cannot benefit from this exemption. Residency status is assessed based on residence permits and actual living conditions.

3. For which properties does the VAT exemption apply?

The VAT exemption applies only to first-hand sales of residential properties or workplaces. It does not apply to second-hand real estate sales. The property must be sold for the first time by the contractor or an authorized seller.

4. How must the sale price be paid in order to benefit from the VAT exemption?

The entire sale price must be paid in foreign currency brought into Türkiye from abroad. The transfer of foreign currency must be made through a bank, and this payment must be proven with official banking documents. Cash payments or payments made in Turkish Lira eliminate the right to VAT exemption.

5. Can a property purchased with VAT exemption be sold?

Yes, but the property must be held for at least 1 year. If the property is sold before the expiration of this period, the VAT that was not paid will be collected from the buyer together with interest. Therefore, investors planning an early sale must proceed with caution.

6. How is VAT exemption applied during the title deed process?

During title deed transactions, it must be clearly stated that the sale is a VAT-exempt sale. In addition, bank documents regarding the foreign currency transfer and documents proving that the exemption conditions are met must be included in the title deed file. Any mistake made at the land registry may result in VAT liability later.

7. Can foreign companies benefit from the VAT exemption?

No. Foreign companies or foreign legal entities with branches in Türkiye cannot benefit from this VAT exemption. The exemption applies only to natural persons.

8. Can VAT exemption and citizenship application be made together?

Yes. Applying for Turkish citizenship through real estate acquisition and benefiting from VAT exemption is possible simultaneously. However, the conditions of both processes are independent from one another. A mistake in one process may negatively affect the other. Therefore, transactions should be planned in an integrated manner.

9. Can the VAT exemption be revoked retroactively?

Yes. If it is determined that the conditions have not been met, the VAT exemption may be revoked retroactively, and the unpaid VAT amount will be collected together with late payment interest. The most common reasons for revocation include failure to bring foreign currency from abroad and early sale of the property.

10. Why is attorney support important in VAT exemption for foreigners acquiring real estate?

VAT exemption for foreigners in real estate acquisition is a technical field at the intersection of tax law, land registry legislation, and foreigner law. Incorrect payment methods, missing documents, or errors in title deed annotations may lead to serious financial liabilities. An experienced real estate and foreigner law attorney ensures that the process is carried out in full compliance with the law from beginning to end. As Uzunpınar & Tüfek International Law Firm, we ensure that foreign investors benefit from VAT exemption safely and effectively.