From 1 January 2015, the original six-month term with regard to the so-called project developers ruling becomes effective once again. 1 January 2015 also sees the return to the original six-month term for the so-called resale provision of Section 13 of the Legal Transactions (Taxation) Act.
Property developers ruling
Section 15 (1)(a) of the Legal Transactions (Taxation) Act provides that a transfer of title of a newly created property subject to turnover tax is exempted from real estate transfer tax (this is known as the concurrence exemption). The object is to avoid accumulated real estate transfer tax and turnover tax.
This does not apply if the immovable property has been used as an operating asset and the acquirer can deduct all or part of the turnover tax, unless (i) the so-called property developers ruling is applicable and (ii) on the date of acquisition the immovable property has, less than six months prior to this date, been occupied or utilised or let out by the vendor. This six-month term had been temporarily extended to 24 months by the State Secretary for Finance. However, the original term of six months becomes applicable once again from 1 January 2015. Consequently, if a newly created immovable property is occupied or utilised or is let out by the property developer before 1 January 2015, the property developer can transfer the immovable property while invoking the concurrence exemption during a period of 24 months.
Section 13 term
If an immovable property is acquired within six months of a previous acquisition, Section 13 of the Legal Transactions (Taxation) Act provides that the real estate transfer tax base is reduced by the amount over which real estate transfer tax was already paid in connection with the previous acquisition. This six-month term had been temporarily extended to 36 months by the State Secretary for Finance. In this case also, the original term, namely of six months, becomes applicable once again from 1 January 2015.
If ownership of an immovable property is acquired prior to 1 January 2015, this facility may be utilised during a term of 36 months following the acquisition of ownership (i.e. until no later than 31 December 2017).
For questions or more information, please contact Serkan Özel.