Important Tax Changes in the Greek Property Market

By Georgia Lainiotis

Breaking Tax News in the Greek Real Estate Market

As of March 1st, 2007, the Ministry of Finance implemented an increase in tax values for all real property located in Greece. Prior to March 1st, 2007 tax values for real-estate in Greece did not reflect market/sales values. The differential between tax values and market/sales values ranged from an astonishing 10 % to 1,000 +%, depending upon

i) a property’s location and

ii) whether a property is located within or outside of the planning zone.

This discrepancy in tax values and market values was predominantly the result of a significant increase in real estate values in the last 8 years.

The Greek Government’s plan to equalize tax and market values for real estate is a two year plan. According to official Ministry of Finance announcements, in 2007 and as of March 1st, 2007 the lower-upper tax values for the country as a whole will increase an average 16% for real estate within planning zones while real estate outside of planning zones will increase on average 36% for land and 37% for developed land respectively.

The Ministry’s tax value adjustment plan will have a far reaching impact. More specifically, it will affect the following:

  • Real-Estate Transfer Tax (which will be calculated based upon the adjusted tax value)
  • Inheritance Tax (which will be calculated based upon the adjusted tax value)
  • Property Endowment/Gift Tax (which will be calculated based upon the adjusted tax value)
  • Rental Income Tax (as of 2008)
  • Legal Expenses for Real Estate Transactions (which is designated as 0.9% of the property tax value for sales and 1.025% for property transfers)
  • Notary Fees (which range from 0.45%-0.75% of tax values)
  • Increased Expenditures for Owner Occupied and Renter Occupied Households (the Electrical Company –DEH will be recalculating charges for all households based on the new tax values)
  • Capital Gains Tax- will apply for the first time in Greece :
    • For Sellers: All property acquired after Jan 1st, 2006 (whether by inheritance, endowment-gift or purchase) if sold within a 3.5 - 5 year time frame will be taxed 20% upon the difference between the property’s tax value from acquisition date to selling date.
    • For Buyers: In transactions where capital gains tax applies the property transfer tax for buyers will be eliminated (which was 9-11% of the property’s tax value), and instead an “exchange fee” will be implemented. This fee will be only 1% of the property’s tax value.
  • First-Time Buyers Tax- in order to assist first time buyers the deductible will be increased to 20% as of March 1st.
The Greek Tax Authorities' Adjusted Property Values have tremendous implications for real-estate investors, owners, as well as for estate planning.

It is strongly recommended that you seek well qualified professional assistance for every and all real-estate transactions in Greece.

Georgia Ismini Lainiotis, CEO
GPME-Greek Property Made Easy
© Copyright GPME 2007

(Posting date 18 March 2007

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