PARENTAL CONCESSIONS AND OTHER TRANSFERS

Record property transactions expected this year

record-property-transactions-expected-this-year

The stage has been set for two decade-old records to be broken in the property market, after the government’s interventions for the last quarter of the year: the records for the number of parental concessions and the number of transactions.

The abolition of tax on parental concessions worth up to 800,000 euros since last Friday, the lifting of obligations for the electronic identification of property assets for another three months (till year-end) and the maintenance of the mostly lower taxable rate of properties – known as objective values – have given candidate buyers and those interested in parental transfers the opportunity to act, so they are rushing to notaries’ offices.

After the impressive performances of 2010 and 2011 – with 116,000 and 65,000 respectively – parental concessions slumped, with no more than 25,000-35,000 properties passed on each year from parents and grandparents to their children and grandchildren.

However, the government push in the last quarter of this year is expected to bring the parental concession figures back up to 2011 levels, while property transactions in general are expected to rise above 100,000 in 2021, a figure unseen since 2010.

The increase in the tax-free threshold for parental concessions and donations to €800,000 is not the only reason for that shift in transactions – after all, until end-September a married child with two children of their own could accept a tax-free concession up to €300,000 from a parent.

There are more factors for the expected records by the end of 2021 – namely that the increase in objective values as of January 1, 2022 in the majority of the country’s zones will entail a rise in fees for notaries, cadaster registration, contract copies etc.

Furthermore, the mandatory issue of an electronic ID for each property as of January 1 could increase the cost of each transaction by as much as €1,000.

The rising objective values alone constitute the main reason for the jump in overall transactions, while there is also the 3% transaction tax on the property’s value.