BUSINESS

New property tax cut on the way

PROKOPIS HATZINIKOLAOU

TAGS: Taxation, Property

Implementing its pre-election pledges earlier than originally announced, the government will proceed with a new reduction in the ENFIA property tax in 2020.

Speaking in Parliament on Wednesday, the third and final day of debate to approve next year’s budget, Prime Minister Kyriakos Mitsotakis said that when next year’s budget is voted on, the reduction will be by an average rate of 8 percent, while overall cuts in the two-year period 2019-20 will reach 30 percent.

For example, someone who paid 500 euros for ENFIA in 2018 will pay 350 euros in September 2020 – a 150-euro cut. However, the 8 percent reduction in ENFIA will be targeted rather than horizontal.

The greatest reductions will be in areas where so-called objective values (property rates used for taxation purposes) are set to increase, as the government’s goal is to keep taxpayers from having to pay higher rates because of adjustments in objective values.

According to a Finance Ministry official, objective values will be harmonized with market values in the first six months of 2020 and this will not lead to horizontal reductions in the property tax, but to other solutions that will measure how much the value of real estate will increase in some areas and how much it will decrease in others.

A case in point is properties in downtown Athens where prices have already risen significantly, leading in turn to a significant rise in objective values.

With this in mind, additional changes must be made to the property tax scales for properties in such areas in order to ensure that the reductions for property owners made in 2019 (an average of 22 percent) are not offset, and so that they can reap benefits, albeit smaller ones, from the second round of property tax cuts.

The government’s fundamental aim is for objective values not to become a tool in the drafting of policy, but to create values that will help the property market, which in turn will bring revenue into the state coffers through real estate transactions.

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