Closing the ENFIA loopholes

New 10% discount to come with specific requirements concerning insurance of properties

Closing the ENFIA loopholes

The government is considering a minimum premium in property insurance deals to prevent sham contracts for luxury homes who owners wish to get the planned 10% discount on their Single Property Tax (ENFIA).

The Finance Ministry is planning to take into account the cost of insuring for the reconstruction of a residence, which ranges from 1,200 to 1,800 euros per square meter for an average home.

Today the average cost for home insurance in Greece and the amount of exemptions that can be contained in a contract, is between 0.14% and 0.18% for constructions after 2000 and rises up to 0.165% and 0.21% for older buildings, from 1970 onward. This price is the premium one pays to buy €1,000 of insured capital.

The final cost is calculated based on the reconstruction value for every €1,000 of insured value, which based on market prices starts from €1,100 and can reach up to €1,400, depending on the quality of construction.

Based on the above, the cost of insuring a property of, for example, 80 sq.m., if it is a 2000 construction, is close to €145 per year (calculated with a reconstruction cost of €1,300/sq.m.) and in the case that ENFIA of €300 is charged per year, the discount of 10% from the ENFIA means a benefit of €30.

According to the draft law to be submitted to Parliament on Wednesday, the ENFIA is reduced by 10% for residences that are insured in an insurance company registered in the Register of Insurance Companies, against earthquake, fire, flood and elements of nature, as long as the insurance covers 100% of the value of the property.

The value of the property is taken as the value of the building or buildings, not counting the value of the plot, while a condition for the reduction of the ENFIA is that the insurance covers at least three months of the previous year. In the event that the duration of the insurance is less than one year, the reduction of the ENFIA is adjusted proportionally. For example, they’ll get a 10% discount when the insurance is for 12 months, 7.5% for nine months insurance and 5% for six months insurance.

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