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VAT cuts promote luxury home sales in Turkey
The government’s stimulus package includes lowering of the value added tax from 18 to 8 percent for three months for homes over 150 square meters. The tax cut has led to an average of 10 percent decreases in prices. Villa and luxury homes now have prices that are about equal to a modest three-bedroom apartment
All eyes have turned to luxury resident and villa projects after the government lowered the value added tax to 8 from 18 percent for three months for homes over 150 square meters.
The measure comes as a part of the government’s stimulus package. The tax cut has led to an average of 10 percent decreases in prices. Villa and luxury homes now have prices that are about equal to a modest three-bedroom apartment.
The government’s decision to temporarily cut the tax has led to sudden price decreases ranging from 30,000 Turkish Liras to 180,000 liras for units that are 150 square meters or more. However, sector leaders drew attention to the fact that low and medium-income groups did not benefit from this decision. Sector players demand that similar attractive measures should be applied to the whole sector and not only to homes of 150 square meters or more. They expect the stimulus decision to be expanded to homes smaller than 150 square meters.
Visits and calls to the sales offices of luxury houses have increased in the past weeks, according to sector representatives. This increase has not yet reflected on sales statistics, they added. One reason for the lack of change in sales figures is the expectation that the Turkish Central Bank will decrease home loan interests by one point as it did in interest rates. The VAT rate applied to homes smaller than 150 square meters is 1 percent anyway. Since prices of homes larger than 150 square meters are much higher than medium-size apartments, the tax cut reflects as a significant price cut.
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