May 18 2018

Turkey slashes taxes on property purchases

Turkey’s government slashed sales taxes on purchases of business premises ahead of snap elections in June, mirroring a reduction for home buyers, Hurriyet newspaper reported.

The tax rate was reduced to 8 percent from 18 percent, Hurriyet reported. The discount will be valid until the end of October, it said.

The Turkish government, preparing for presidential and parliamentary elections on June 24, is seeking to revive the real estate sector as demand slows amid an increase in interest rates, which has pared demand for mortgages. Home prices are rising at a slower pace than inflation, which was 10.9 percent in April.

Housing developers are offering discounts on purchases of new homes. The government has also ordered state-run banks to cut mortgage rates to below a psychological level of 1 percent monthly. Most banks charge rates of about 1.3 percent on 10-year mortgage loans.

The construction industry has led economic growth in Turkey over the past decade and many company owners are business allies of President Recep Tayyip Erdoğan.