Government cuts VAT for certain house sales

A temporary article was added on the determination of value-added tax (VAT) rates by a decree that was published in the Official Gazette yesterday.

It was decided that the implementation of VAT, which is currently applied at 18 percent for house sales that measure above 150 square meters, was to be decreased to 8 percent, a measure valid until March 31, 2017.

With this move, the government has taken another step to alleviate the burden on the housing market, continuing its other actions to revive the real estate market which has a high potential on the demand side due to Turkey's growing young population, in addition to the potential on the supply side, with the realization of the government's mega projects that add further value to the market.

Also, in August, in response to the government's call to cut annual interest rates on home loans below 10 percent to revive markets, more than 20 big Turkish banks went for rate cuts on housing loans. The sector's representatives welcomed these decisions, saying that this shows confidence in the Turkish economy and that they expect further rate cuts both in the housing sector and other sectors to support sustainable growth in the economy.

Following these steps taken by the banking sector, sector representatives previously expressed that it is now the turn of the finance ministry to go for a discount on the VAT and title deed fees. Speaking to the Dünya daily last month, chairman of the Association of Developers and Investors in Real Estate Sector (KONUTDER) Ömer Faruk Çelik said the decision by these banks shows the trust in the strong foundation of the Turkish economy, adding that these loan rates can be lowered further.