PROPERTY TAXATION

New objective values to apply from 2022

new-objective-values-to-apply-from-2022

The government will announce the new property zone rates for the entire country this summer, but they won’t come into effect until January 2022.

The competent agencies of the Finance Ministry have completed the process for the adjustment of the property prices used for tax purposes – known as “objective values” – and it is now up to the political administration of the ministry to approve them. Once that is done, the Independent Authority for Public Revenue will establish by how much and in which areas the Property Tax (ENFIA) will increase as of next year.

The publication of the new zone rates will allow buyers and sellers to carry out or postpone property transactions. In the areas where the objective values rise in 2022 it will makes sense for property purchases to proceed within this year, so that the transfer tax due is smaller. By contrast, those planning transactions in areas that will see a reduction next year would be better off waiting for a few months.

Of course if the property to change hands is a main residence, it is likely the transaction price will be covered by the tax-free threshold, meaning no extra tax would be due anyway. However, if the transaction concerns commercial property or a secondary residence, where the tax-free thresholds do not apply, interested buyers should consider where their interest lies.

Based on the intentions of the ministry, this year’s ENFIA will be calculated based on the existing objective values; therefore, unless there has been some change in one’s property situation, the ENFIA dues will remain at the same level as last year.

As of January 2022, all transactions will be calculated according to the new taxable rates, and so will ENFIA, which is still projected to undergo an average cut of 8% next year.

The inclusion of some 3,000 additional areas in the objective values system is expected to generate additional fiscal space of 400-500 million euros, which will be used for the further reduction of ENFIA – after the 22% cut in 2019.

Next year the government will also implement changes to the supplementary property tax. That will affect some 450,000 owners. The Pissarides Committee has proposed its abolition.