What Is the VAT (KDV) for New Builds?

What Is KDV and Why It Matters When Buying a New Build

KDV (Katma Değer Vergisi) is the Turkish value-added tax added to the price of goods and services. When buying real estate, KDV is charged only on new builds purchased directly from a developer or construction company. Secondary market transactions are not subject to this tax, which makes the issue particularly relevant for investors and homebuyers in Turkey’s new residential complexes.

The amount of KDV directly affects the final transaction budget: for an apartment costing $200,000, a 1% rate adds $2,000, while 18% adds $36,000. Therefore, knowing which rate applies to a specific property is not a formality but a real way to avoid unpleasant surprises at the contract signing stage.

Three VAT Rates on New Builds: 1%, 8%, and 18%

As of 2025, Turkey applies a differentiated KDV scale for primary market properties. The specific rate depends on three factors: the property’s purpose, its area, and the land plot status.

1% Rate — The Base Rate for Residential Property

The most common and advantageous rate. It applies to residential properties (konut) with a net area (net alan) of up to 150 m². The vast majority of apartments in modern residential complexes in Antalya, Alanya, Istanbul, and other regions popular with foreigners fall into this category. Developers target this rate when advertising ‘apartments with 1% VAT’.

• Condition: the property must be classified as residential in the land registry;
• Area: net area up to 150 m² — excluding balconies, terraces, and common areas;
• Who pays: the buyer, unless eligible for exemption.

8% Rate — For Spacious Housing

If the net area of the apartment exceeds 150 m², the KDV rate rises to 8%. This affects penthouses, duplex apartments, spacious villas, and larger apartments. In some classifications, this rate is listed as 10% — the discrepancy is due to different legislative versions; in practice, developers apply 8% in 2025.

18% Rate — Commercial Property and Special Cases

The 18% rate applies in the following situations:

• Commercial property: offices, shops, warehouses, hotel-type apartments that are not classified as residential;
• Housing on a commercial plot: even if it is de facto an apartment, but the land has commercial status (ticari arsa) — the tax will be 18%;
• Land plots with a cadastral value above 1,000 TL/m².

How to Find Out the KDV Rate for a Specific Property

Do not rely solely on the developer’s or realtor’s word. The KDV rate is stated explicitly in the contract and official documents, but there are ways to verify the information in advance:

1. Check the land plot's cadastral status — residential (konut) or commercial (ticari). This can be done through an extract from the land registry (Tapu Kadastro);
2. Clarify the net area specifically in the net alan parameter, not the gross (brüt alan);
3. Request an official specification from the developer stating the applicable KDV rate;
4. Engage an independent lawyer to review the documents before signing the contract.

KDV Exemption: Who Can Avoid Paying KDV and How

For foreign buyers, Turkish legislation provides a mechanism for full exemption from KDV when purchasing a new build. This is not a loophole or a gray scheme — the exemption (KDV istisnası) is enshrined in the Turkish Tax Code and is actively applied in practice.

Conditions for Obtaining the Exemption

• No long-term residence in Turkey: the buyer must not have stayed in the country for more than 180 days in the last 12 months before the transaction. A short-term tourist residence permit does not prevent the exemption, but a residence permit exceeding 6 months does;
• Payment in foreign currency: funds must come from a foreign bank in USD, EUR, GBP, or another foreign currency. Payment in Turkish lira from a Turkish account nullifies the right to exemption;
• Purchase from a developer: the exemption applies only to new builds from construction companies, not to the secondary market;
• Holding period: the property cannot be resold within 1 year from the date of title deed registration. If this condition is violated, the tax will be reassessed.

If all conditions are met, the KDV rate for the buyer becomes zero. This saves from 1% to 18% of the cadastral value — a significant amount, especially for expensive properties.

Who Pays the VAT and When

The obligation to pay KDV lies with the buyer. The tax is paid at the stage of title deed registration (TAPU issuance) or is included in the payment schedule under the developer’s contract. Two scenarios are possible:

• 100% payment upfront: KDV is paid in full together with the total property cost;
• Developer installment plan: the KDV amount is distributed proportionally to payments — when 50% of the price is paid, 50% of the tax is paid.

If the buyer qualifies for exemption, KDV is not charged and not paid at all — the developer submits the corresponding declaration to the tax office.

Comparison: KDV in Different Purchase Scenarios

For clarity, here is an example calculation for an apartment with a cadastral value of $150,000:

• Apartment up to 150 m² (1% rate): KDV = $1,500;
• Apartment over 150 m² (8% rate): KDV = $12,000;
• Commercial property (18% rate): KDV = $27,000;
• Exemption for a foreigner: KDV = $0.

The difference between the minimum and maximum scenarios is $27,000. The practical takeaway: before buying, be sure to find out not only the price per square meter but also the KDV rate applicable to the specific unit.

Frequently Asked Questions and Pitfalls

Can Already Paid KDV Be Refunded?

If a foreign buyer pays KDV and later finds out they were entitled to an exemption, getting a refund is extremely difficult. The refund procedure (KDV iadesi) is bureaucratically complex and rarely succeeds in practice. Therefore, the exemption status must be confirmed before payment, not after.

Does Citizenship Affect the Rate?

No. The KDV rate is the same for Turkish citizens and foreigners. The only difference is that foreigners (and Turks living abroad) can claim exemption if the conditions listed above are met.

Does KDV Apply to Parking Spaces and Storage Rooms?

If a parking space or storage room is documented separately and has commercial property status, the 18% rate may apply. If they are included as part of the residential unit and not separated into a distinct title deed, the tax is calculated at the rate applicable to the main property.

Summary: What to Remember About KDV on New Builds

VAT when buying a new build in Turkey is not a fixed amount but a flexible parameter depending on the property’s characteristics and the buyer’s status. The base 1% rate applies to most residential apartments up to 150 m², and foreign buyers not residing in Turkey can legally avoid paying KDV entirely — provided they pay in foreign currency from abroad and hold the property for at least one year. The key is to check all details before the transaction: the plot status, net area, and eligibility for exemption. Proper preparation will save you anywhere from a few thousand to tens of thousands of dollars.