A new landscape is expected to emerge in the real estate market as of January 1, with an easing of taxes as well as additional obligations for property owners.
These changes foresee the abolition of the additional tax on real estate, which paves the way for the accumulation of property, a new scale for the Single Property Tax (ENFIA) rates, and the introduction of a permanent mechanism for updating property rates (“objective values”) used for tax purposes, so that they remain close to the commercial value.
The intention of the Finance Ministry is to also adjust commercial tax rates and age coefficients, which have remained at the same level for many years. This has resulted in unfair taxation, as a 26-year-old property has the same taxable value as a 50-year-old property.
Although the new value-added tax directive will be effectively activated in 2025, it paves the way for the extension of the exemption of newly built properties from the 24% VAT rate.
The exemption was voted in 2019 as a temporary measure with an expiration date of 2022 and was one of the main reasons behind the sharp increase in the issuance of new building permits, as the construction industry accumulated real estate to be sold without the 24% tax. However, the construction industry also argues that the coronavirus pandemic and its lockdowns led to building delays in 2020 and 2021.
At the same time, the freezing of the capital gains tax is expected to move ahead as it is seen slowing down investments in the real estate market, without even yielding much revenue.
The government’s financial staff will have to show its cards soon regarding the additional corporate tax and whether there will be some kind of “luxury tax” for high-value real estate.
Other changes include the exemption of real estate transfers from VAT after the end of 2022, as well as the simplification of the property transfer process.
From 2022, however, liabilities with costs for the owners will also be finalized. No transfer will take place without the issuance of the electronic building ID while the gradual abolition of heating oil burners will begin, in favor of more environmentally friendly heating systems.
On the agenda are financial incentives for real estate energy upgrades.