Changed VAT rates for Property sale per 2013

Sale of immovable property by enterprises has to be invoiced including VAT of 18%. This is the general rule, but the VAT rate for sale of immovable property by enterprises in the capacity of contracting firms has been adjusted since the 1st of January 2013.

Contractors who build and sell their houses c.q. apartments to consumers will pay much more VAT than they have done until now. With the amendment the VAT rate is not merely depended on the total square meter of a house, but is related to the m2-value calculated on the property value provided by the municipality.

For properties up to a value of 500TL per m2 applies a VAT rate of 1%, between 500 and 1000TL per m2, a rate of 8%, values higher than 1000TL per m2 and for plot land a VAT rate of 18% has to be applied.

Before 2013 the VAT rate was respectively 1% and 18% for floor area less than 150 m² and for area larger than 150 m².
The introduction of the new VAT rate was needed to create equity in the housing market due to that the same VAT rate of 18% was applied for every kind of house without making any difference in places. A contractor who builds an apartment with the same square meter in Istanbul paid the same VAT as another contractor who builds the same apartment in Samsun or Konya. Although the value of the houses could change considerable.

The new rate took effect on the 1st of January 2013, with many objections from the business society!