Property owners fear tax on their assets will leap from 2017


TAGS: Property, Taxation

Owners of real estate in Greece should brace for even higher taxes on their assets from next year, the Panhellenic Federation of Property Owners (POMIDA) warned this week, ahead of the creation of a new tax system for properties.

POMIDA expressed serious concern that this year’s fresh hikes in the Single Property Tax (ENFIA), which have affected over half a million owners, will seem insignificant compared to what is being prepared for them for next year.

According to POMIDA, “if ENFIA is replaced by an even more plunderous property tax, it will cause a halt in payments, as the new tax will multiply the obligations of the already squeezed citizens using the tax exemption for the main residence as a pretext.”

POMIDA’s concerns stem from information in reports that suggest the Finance Ministry is planning to reform the way the annual property tax is calculated: It will no longer be based on the surface area of each property, but rather on the total value of each taxpayer’s property. If that proves to be the case, it will constitute a return to the FAP property tax that had applied in the two years before the previous form of ENFIA was introduced in 2011.

Yet given that the annual collection target from the new property tax will remain at the same level as ENFIA, i.e. 2.65 billion euros, and a low tax-free threshold will also apply, the new tax will have to be imposed with very high rates, which is expected to lead to a heavy burden on owners of average properties. It is noted that for the above target to be met, the tax-free threshold should not exceed 20,000-30,000 euros.

Whatever the form of the new tax is, it will be based on the new so-called objective values (property rates used for tax purposes). The special committee set up at the Finance Ministry for the adjustment of the objective values to the going market rates, with the participation of a multitude of sector professionals and institutional entities, will complete its work in the coming months.

However, sources say that there are conflicting views among the members of the committee regarding the way that the new objective values will be calculated in order to reflect the actual prices in the market with the highest possible accuracy. The government’s proposal to have each property assessed by a chartered surveyor to establish the transfer tax is proving a thorny issue, as the entities in the sector have suggested that such a method would leave the system of value calculation open to illegal transactions between surveyors and taxpayers.