WHAT ARE THE CHANGES IN VAT RATES TO BE APPLIED TO REAL ESTATES MADE WITHIN THE SCOPE OF URBAN RENEWAL?
With the amendment made, the phrase “housing deliveries up to 150 m2” was changed to a part of the net area of housing up to 150 m2 made within the framework of urban renewal projects. Thus, VAT rate will be applied as 1% up to 150 m2 net area of this kind of real estates. However, %18 VAT rate will be applied to the part of the real estates that exceeds 150 m2.
VAT for Real Estates that Reconstructed Within the Scope of Urban Renewal
| A Property Value of TRY 3.020.000 and net area of 151 m2 | ||
| Net Area | For the first 150m2 | For the remaining 1m2 |
| Sales Price | TRY 3.000.000 | TRY 20.000 |
| VAT Rate | %1 | %18 |
| VAT | TRY 30.000 | TRY 3.600 |
HOW IS VAT CALCULATED FOR REAL ESTATES WITH A NET AREA BELOW 150 m2 ?
First of all, with this amendment, different critieria in calculating the VAT of the real estates which have the net area up to 150 m2 were removed.
According to the change made on 29.03.2022, the VAT rate to be applied for up to 150 square meters of real estate was determined as 8%. But %18 VAT rate will be applied to the part of the real estates that exceeds this net area.
For example, if the net sales price of the real estate with a net area of 120 square meters is TRY 1,000,000 the VAT rate to be applied will be calculated from 8% and VAT will be paid as TRY 80.000.
VAT for Real Estate with a Net Area Over 150 m2
| A Property Value of TRY 1,000,000 and net area of 170 m2 | ||
| Net Area | For the first 150m2 | For the remaining 20m2 |
| Sales Price | TRY 1.500.000 | TRY 200.000 |
| VAT Rate | %8 | %18 |
| VAT | TRY 120.000 | TRY 36.600 |
HOW TO CALCULATE VAT ACCORDING TO NEW CHANGES IN LAND/LAND SEARCHES?
With the change, there is also a change in VAT calculations on plot and land sales. VAT was previously calculated as 18% for land and land sales, and this rate was reduced to 8% with the changes.
Such as, the VAT of the land with a net sales price of TRY 1,000,000 decreased from TRY 180,000 to TRY 80,000 after the changes.
WHEN IS THE CHANGE ENTERED INTO FORCE?
According to the relevant provision in the Presidential decision, the date of the change is entered into force is the month following the publication of the change. In this case, the change published in March 2022 will be applicable as of 01.04.2022.
ARE THE IMMOVABLES BUILT WITHIN THE SCOPE OF THE CONSTRUCTION PERMITS OBTAINED BEFORE THIS DECISION AFFECTED BY THESE CHANGES?
In accordance with the published amendment text, for structures built under construction permits obtained before 29.03.2022, these changes will not find an application area.
For your kind attention,