ax Exemption Removed for Sale of Real Estate Registered as Active Assets
The exemption for real estate purchased before July 14, 2023, and sold after that date has been reduced from 50% to 25%, and the exemption for real estate purchased after this date has been completely removed according to Law No. 7456, published in the Official Gazette on July 15, 2023.
In terms of Corporate Tax:
Law No. 7456 has amended the provisions of the Corporate Tax Law (CTL) regarding the exemption from corporate tax for gains from the sale of real estate. The term “real estate” has been removed from Article 5/1-e of the CTL, completely eliminating the exemption for sales of real estate purchased after July 15, 2023. However, for properties purchased before July 14, 2023, a transitional rule has been introduced, allowing the continuation of the exemption, though the exemption rate has been reduced from 50% to 25%.
In terms of Value Added Tax (VAT):
Law No. 7456 also amended the VAT Law by removing the term “real estate” from Article 17/4-r. As a result, the VAT exemption for real estate acquired after July 15, 2023, has been removed, and the sale of such real estate will now be subject to VAT. A transitional rule was introduced to ensure the continuation of the exemption for properties purchased before this date.
To benefit from these exemptions, certain conditions must be met, including holding the sales gain in a special fund account for five years and collecting the sale price by the second calendar year following the sale. Failure to comply with these conditions will result in penalties for unpaid taxes.
Source: Istanbul Chamber of Certified Public Accountants
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