The government is planning to gradually reduce the single property tax (ENFIA) by 30 percent from 2015. That would entail a 750-million-euro drop in property tax revenues.
Finance Minister Gikas Hardouvelis said on Thursday that “the reduction of both the main and the supplementary tax is already one of the government’s objectives.”
Prime Minister Antonis Samaras had already announced that the ENFIA tax was to be gradually reduced, stressing that the revenues would fall from 1.43 percent of gross domestic product to 1 percent, starting from next year, in parallel with a drop in the objective values of properties used for tax purposes.
On the subject of objective values, Hardouvelis said a committee led by the general secretary of public property has already been set up to review the method for calculating property values used by the tax authorities so as to reflect market prices with the greatest possible accuracy.
Government estimates put this year’s expected ENFIA revenues at 2.65 billion euros. This will gradually be reduced to 1.9 billion euros.
It remains unclear whether the ENFIA rates will see across-the-board cuts or if there will only be reductions in certain categories. For instance, it’s possible the government will increase the 20 percent discount for owners of empty houses that aren’t connected to the power grid to 50 percent next year.
The adjustment of the objective values (in 2016 or 2017) will automatically result in the reduction of ENFIA and the supplementary tax paid by owners of properties worth more than 300,000 euros in total. The reason for this is that the tax will be calculated on the near-actual market rates rather than the obsolete objective values which are considerably higher than the going rates.
The new automatic system that will adjust the objective values of properties will be ready at the end of January, which means that the new values will only start applying after January 2016.
Next week the government will submit a draft law to Parliament with various clauses that will include the disengagement of the objective value of a property from the process of registering a property transaction by the tax authorities. What this means in practice is that the contracts in property transactions will cease to mention the objective value of the property, as is the case today, but rather the actual sale price.