The adjustment of Greece’s so-called objective property values (used for tax purposes) within the next six months is impossible, according to Finance Ministry officials who stressed that the amount of data involved in changing the values to represent the going market rate is simply too much for the ministry’s responsible committee to deal with.
The Council of State’s verdict last week provided the government with a six-month period to bring the objective values down to market rates as it has not done so for nearly a decade, but the same ministry officials argued that it was not enough time for the implementation of the demand by the country’s highest administrative court. They added that the ministry would need to draw data from the whole of the country in order to adjust the 10,000 zone values.
Another reason why the government has not changed the objective values in recent years is that they would have had to go up in a number of parts of the country, especially where values range between 500 and 800 euros per square meter. Furthermore, most property taxes are based on the current objective values, so if the government reduced them, budget revenues would be considerably lower compared to what has been agreed with the country’s creditors. For instance, a 30 percent average drop in objective values would lead to a 900-million-euro revenue reduction from the single property tax (ENFIA).
The agreement between the government and its creditors provides for an adjustment to objective values in 2017. According to the timetable, the new automatic system for the adjustment of values will have to be ready by end-January 2016.
However the CoS decision could bring the property market to a standstill, again. While market professionals consider the verdict a boost for the sector, they stress that any delay in its implementation could send the market into a new cloud of uncertainty. “Buyers will understandably postpone their transactions until the application of the verdict,” predicted Lefteris Potamianos, general secretary at the estate agents federation.