AZE.US
Azerbaijani homebuyers can recover part of the value-added tax they pay when purchasing residential property, but many are still losing that benefit because they fail to meet key procedural requirements.
Under the existing mechanism, buyers can claim back 30% of the VAT paid on a property purchase. The system has been in place for some time and has already processed tens of thousands of applications. Still, a large number of requests continue to be denied.
According to the State Tax Service, citizens have submitted 28,237 applications through the relevant portal to reclaim VAT on real estate purchases. Of those, 17,072 applications resulted in payouts totaling 90.7 million manats. Another 9,234 applications were rejected or payment transactions failed.
In the first two months of 2026 alone, 1,265 applications were reviewed. Payments totaling 6 million manats were approved for 964 of them, while 206 applicants received refusal notices.
Officials say the most common reasons for rejection are straightforward but costly. These include failing to apply within 90 days of the final payment date, not including the electronic invoice details in the payment description, paying the principal amount and VAT together instead of separately, and making payments through third parties.
If part or all of the payment is made by another person, the application is only considered if that representative had a notarized power of attorney valid on the date of payment.
Property market experts say buyers should pay close attention to how the transaction is structured, because the refund can amount to a substantial sum.
They say the payment must be made officially to the developer’s bank account and the full amount must be completed properly. Once the payment is finalized, the buyer must apply to the tax authorities and submit the required documents, including the contract with the company.
Another issue concerns the buyer’s legal status in the deal. Real estate expert Ramil Gasimzade said some citizens fail to get the refund even when they have a contract because they are participating in the project as equity holders rather than standard buyers.
In such cases, the payment is treated as an investment in the construction process rather than a regular purchase of finished housing, which can make the buyer ineligible for the VAT refund mechanism.
The State Tax Service also said companies involved in residential construction must submit the required building-related reporting forms in line with the law. Since the portal was launched, developers have submitted 3,914 such forms, while tax authorities continue monitoring and analyzing the process.