By Nikos Roussanoglou

Real estate agents warned that soaring property taxes which have already resulted in bringing the market to a near standstill, will continue to strangle the sector unless the government takes action.

During a public consultation earlier this month on the planned overhaul to the real estate taxation system, the Federation of Civil Contract Realtors of Greece (OMASE) noted the effect that added tax burdens were having on owners, arguing that the successive levies have caused candidate buyers and investors to postpone making any decisions, and property owners with a low income to be unable to pay their dues.

OMASE argued that real estate should be taxed based on the revenues generated from rental and not just on ownership, whether the property is used as a primary residence or for professional purposes. This view is diametrically opposed to that of the government’s new tax framework, which is currently in the process of being put together and which will continue to tax property according to ownership.

Estate agents also stressed the need for a regulation that would allow the repayment period of mortgages to be extended to 99 years. OMASE said that such a measure “would not only benefit borrowers - who, due to the recession, are often unable to pay their installments with interest -- but will also increase the cash flow of banks as they will collect more installments because debtors will be able to pay on time.”

Local real estate agents further believe that it is crucial that steps are taken to contain the decline in transactions in the housing market, calling on the government to introduce a reduction in so-called objective values -- property prices estimated for tax purposes depending on size and location -- and to abolish the co-efficient of commercial potential in professional properties as well as a regulation that estimates the incomes of taxpayers using property ownership as a criterion.

A return on taxes on capital gains, as applied across Europe, would also boost the market OMASE said, as would a reduction of the transaction tax to 5 percent.

As far as the capital gains tax is concerned, its rate would have to be proportional to the value of the property, according to realtors, who said that the reduction could be bigger when purchases concern listed properties, arable land, properties in border regions (such as Corfu, Rhodes, Crete, etc) and even for property purchases funded by the recent sale of another real estate asset.

They called for the acquisition of primary residences and professional properties to be exempt from the transaction tax, and for a ban on the auctioning of properties confiscated over unpaid consumer loan and credit cards. Finally, the realtors reiterate their proposal for a five-year visa to be granted to non-European Union citizens investing in Greek real estate, along the lines of Great Britain.