You may pay value-added tax (VAT, Katma Değer Vergisi/KDV) depending on the property type, the seller’s taxpayer status, and whether a statutory exemption applies. VAT is charged on the sale price by VAT-registered sellers at rates set by law, and certain first-time sales to non-residents are exempt if strict foreign currency and timing conditions are met.[1][2][5]
The short answer
VAT applies to the “delivery of goods and services” made within the scope of commercial, industrial, agricultural, or professional activities by VAT taxpayers, which includes many developers and real estate companies.[1] Private individuals who sell a property outside the scope of a commercial activity are not VAT taxpayers, so their sales are not subject to VAT.[1] Residential and commercial units sold by developers are typically subject to VAT, with the applicable rate determined by presidential decrees and annex lists under the VAT Law.[2][3] There is a statutory VAT exemption for the first delivery of residences and workplaces to certain non-resident buyers who bring the consideration from abroad in foreign currency and satisfy additional conditions.[4][5]
Legal basis and who is the taxpayer
Article 1 of the VAT Law No. 3065 establishes VAT on deliveries and services performed within the scope of commercial, industrial, agricultural, or independent professional activities in Turkey.[1] The seller who is a VAT taxpayer accounts for VAT; the buyer does not file VAT directly but pays the VAT-inclusive price to the seller, who in turn declares and remits it.[1] As a consequence, a sale by a construction company or real estate developer is generally within VAT scope, while a one-off sale by a private individual acting outside a commercial activity is typically outside VAT scope.[1] The applicable VAT rates and reduced lists are set by presidential decrees issued under Article 28 of the VAT Law, most recently adjusted in 2022 and 2023.[2][3]
VAT rates for residential and commercial property
Residential sales by developers are subject to reduced or general VAT rates depending on the net area and specific housing rules introduced by presidential decrees. In April 2022, Presidential Decree No. 5359 restructured VAT on housing, setting a reduced rate for deliveries of residences with a net area up to 150 square meters, and the general rate for residences above this net area threshold.[3] In July 2023, Presidential Decree No. 7346 increased the general VAT rate from 18% to 20% and the reduced rate from 8% to 10%, which flow through to housing unless a specific lower rate applies under the decree and its annexes.[2] For commercial properties such as offices and shops, the general VAT rate applies to deliveries by VAT taxpayers unless a listed reduced rate or exemption applies.[2] The Revenue Administration maintains current VAT rates and lists that specify which goods and services fall under reduced categories.[6]
Exemption for first delivery to non-residents paying with foreign currency
Law No. 6824 introduced an exemption for the first delivery of residences and workplaces to certain non-resident buyers, codified under the VAT Law and detailed in the VAT General Application Communiqué.[4][5] The exemption applies to the initial sale by the developer (first delivery) and may be used by non-resident individuals who are not settled in Turkey and by non-resident legal entities, provided that the sales price is brought into Turkey in foreign currency through banks and the documentary requirements are met.[5] The Communiqué provides that at least half of the consideration must be paid by the date of title deed transfer or notarized preliminary sales contract, and the remainder within one year, with the funds originating from abroad in foreign currency.[5] If the property is disposed of within a one-year holding period starting from the title registration or contract date, the previously uncollected VAT becomes due along with late payment interest, which the seller must then assess and collect per the procedure.[5] The seller must issue an invoice indicating the specific legal exemption and retain bank documentation proving the foreign currency inflow to apply the exemption in their VAT returns.[5]
When VAT is not charged on a property sale
When a private individual sells a property as a non-commercial transaction, the sale is outside the scope of VAT, and no VAT is added to the price; in practice, most secondary-market sales between individuals proceed without VAT, though title deed fees and other charges still apply under separate laws.[1] Land sales follow the same principle: if the seller is not acting within a commercial or professional activity as a VAT taxpayer, the transaction is outside VAT scope, but if a company or trader sells land within its commercial activity, VAT may apply at the rate determined by the decrees and lists.[1][2][6] Secondary sales of residences or workplaces by persons who are VAT taxpayers only in relation to other activities can still fall outside VAT if the property sale is not part of a commercial real estate trading activity as defined by the VAT Law and administrative guidance.[1][5] Buyers should verify the seller’s VAT status and the nature of the activity before agreeing on the price, because VAT—if applicable—is a cost included in the sale price rather than a post-closing surcharge.[1]
Practical documentation and process points
To benefit from the non-resident first-delivery exemption, sellers and buyers must ensure that foreign currency funds are transferred from abroad through banks and documented by bank letters or receipts that meet the Revenue Administration’s standards.[5] The exemption must be reflected on the developer’s invoice with the correct legal reference, and the title deed transfer or notarized preliminary sales contract date must align with the payment schedule required by the Communiqué.[5] For properties that do not qualify for the exemption, developers should apply the correct VAT rate according to the current presidential decrees, particularly after the 2023 rate increase to 10% for reduced and 20% for general categories, and should classify the property correctly as residential under the housing rules or as commercial for office and shop units.[2][3][6] Buyers should ask the seller for proof of VAT treatment, including the invoice showing the rate or the exemption annotation, and should obtain tax professional advice where needed because VAT interacts with other purchase costs and financing arrangements.
Summary
In Turkey, VAT is charged on developer or commercial seller deliveries of real estate at rates currently aligned with the 10% reduced and 20% general VAT tiers, subject to specific housing rules under the 2022 decree and subsequent 2023 rate changes.[2][3] Many secondary-market sales by private individuals are outside the scope of VAT entirely.[1] A notable exemption allows non-resident buyers to purchase newly delivered residences or workplaces without VAT when the sale is the first delivery and the price is brought from abroad in foreign currency under the procedural and timing conditions set by law and the Revenue Administration.[4][5] Because VAT outcomes depend on the seller’s taxpayer status, the property’s classification, and compliance with exemption conditions, prospective buyers should review documentation carefully and consult a licensed tax advisor for transaction-specific guidance.
Related Questions:
Q2: What other taxes and fees apply when buying property in Turkey?
Q3: How does the “first delivery” rule work for new-build homes?
Q4: Are resale property purchases from individuals subject to any taxes at closing?
Q5: What documents are required to claim the VAT exemption for non-residents?
References:
[1] Official Gazette (Resmi Gazete). “Katma Değer Vergisi Kanunu (Law No. 3065).” https://www.mevzuat.gov.tr/mevzuat?MevzuatNo=3065&MevzuatTur=1&MevzuatTertip=5
[2] Presidency of the Republic of Türkiye. “Presidential Decree No. 7346 (KDV rates update), 7 July 2023.” https://www.resmigazete.gov.tr/eskiler/2023/07/20230707-1.pdf
[3] Presidency of the Republic of Türkiye. “Presidential Decree No. 5359 (Housing VAT arrangements), 12 April 2022.” https://www.resmigazete.gov.tr/eskiler/2022/04/20220412-7.pdf
[4] Official Gazette (Resmi Gazete). “Law No. 6824 on Amendments to Certain Laws for the Improvement of the Investment Environment, 8 March 2017.” https://www.resmigazete.gov.tr/eskiler/2017/03/20170308-1.htm
[5] Revenue Administration (Gelir İdaresi Başkanlığı). “VAT General Application Communiqué (KDV Genel Uygulama Tebliği) – Exemption for first delivery of residences and workplaces to non-residents.” https://www.gib.gov.tr/sites/default/files/fileadmin/user_upload/Tebligler/KDV_Tebligleri/kdv_gut_son.pdf
[6] Revenue Administration (Gelir İdaresi Başkanlığı). “Current VAT Rates and Lists.” https://www.gib.gov.tr/kdv-oranlari
Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or investment advice. Property law and tax rules in Turkey change frequently. Consult a licensed Turkish lawyer, accountant, or real estate professional before making any purchasing decision.