BUSINESS

Slashing transfer tax brings house transaction costs down

By Nikos Roussanoglou

Following the reduction in the transfer tax to 3 percent since the start of the year, Greece has shown a considerable improvement in the European chart of countries based on total property transaction charges.

According to data analyzed by Global Property Guide, Greece now ranks 20th among 40 countries according to the costs associated with buying a used home, while last year it was the ninth most expensive country in Europe.

The total cost currently amounts to an average of 9.65 percent, against 15.47 percent a year earlier when the transfer tax rate stood at 8 percent for the first 20,000 euros of the property’s value and 10 percent for anything above that amount. The average rate concerns the charges as a ratio of the value of the transferred used house. These charges include not only the transfer tax but also the payment of the estate agent and the lawyer, notary costs and the cost of registration at the Land Register.

The highest costs are in Russia (25 percent), with Italy in second place (22.6 percent), while the lowest are in Iceland (2.91 percent) and Denmark (3.04 percent). Cyprus ranks eighth with an average rate of 16 percent.

That improvement in Greece does not mean that the tax charge is low in this country; the rate does not take into account the capital gains tax of 15 percent that the seller may have to pay during the transaction, or taxes for property ownership – i.e. the new Single Property Tax and the supplementary tax for properties that exceed 300,000 euros.

A recent survey by the Panhellenic Federation of Property Owners (POMIDA) found that of a total of 22 countries, Greece is one of only six that tax the total value of the properties of each owner, rather than each property individually, and use rates that can easily exceed 1 percent of the assets’ value.

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