The Greek government’s economic staff will give a major boost to the real estate market by reducing the taxation of real estate transfers in the new year. The aim is to encourage foreign investment by reducing the real estate tax during the signing of the contracts. According to the government plan, the standard value is no longer to be used as a basis for determining real estate transfer tax. From 2015 onwards, real estate transfer tax will be levied on the real purchase price of the property listed in the contract. After the latest changes regarding the separation of the notional income (the so-called “tekmirio”) for the purchase of the property from the standard value, so that there are no additional burdens for the buyers, but also no obstacles in terms of their proof of assets, there is another provision to strengthen the real estate market.
Real estate transfer tax in Greece
In the real estate market, the opinion prevails that the calculation of real estate transfer tax in Greece according to the standard value is completely unrealistic, especially since the VAT paid by the seller is calculated according to the actual purchase price. At the same time, the interest of investors in holiday homes comes up against both contractual values (unit and real value), which seems completely absurd to them.
According to the new provision, the real estate transfer tax, which is currently calculated at a tax rate of 3%, is to be levied on the actual purchase price and no longer on the standard value. In principle, the standard values in relation to transfers will be abolished and will only be used to determine the single property ownership tax (ENFIA), municipal tax, etc.
Market participants believe that any measure that can lead to a reduction in the current tax burden on real estate will strengthen the real estate market and could gradually lead to an increase in jobs. An example of this:
A married person buys an apartment (a tax exemption is granted for the first residence). The apartment has a total area of 140m2, with a unit value of 270,000 euros and a real value of 190,000 euros. Since this is the first residence, the real estate transfer tax of 3% applies to the 20,000 euros, especially since a tax allowance of 250,000 euros applies. Thus, the tax incurred will amount to 600 euros. If the tax is calculated according to the real sales value, the corresponding property owner does not have to pay any tax.
The taxpayer buys a second home. The property is located in the area of Cholargos in Athens and has an area of 80m2. The unit value of the property is set at 144,000 euros, while the purchase price is 100,000 euros. According to the current regulations, the real estate transfer tax to be paid amounts to 4,320 euros (determined according to the standard value of the property), while this is reduced to 3,000 euros, provided that it is calculated according to the real value of the property.
