Realty market set to blossom
The government’s intention to legislate tax-easing measures and incentives for investments has cultivated great expectations among property market professionals.
The reduction of the Single Property Tax (ENFIA) from this year is a measure that has already had a positive impact on the mood among households, and the government is eager to capitalize on the favorable momentum created with five more measures, including the suspension of the 24 percent value-added tax on newly built properties for three years, the provision of incentives for building renovations, and the reduction of bureaucracy.
It is also maintaining the suspension of the capital gains tax on property ownership and is planning a further reduction of ENFIA for 2020.
One of the moves seen likely to bring added value to the economy, as it will leverage funds, is the planned regulation for the 40 percent tax discount on energy, operational and aesthetic upgrades to buildings, following a proposal by the federation of property owners (POMIDA).
The discount will not be offered in the form of tax cuts at the time but rather in credit for future tax obligations concerning the owner’s account at the General Secretariat for Information Systems.
Likewise, the suspension of the VAT rate of 24 percent on property transfers for the next three years is expected to bolster transactions, especially by buyers from outside Greece.
This tax on new properties sold creates a significant disadvantage for investments in new homes, without any significant fiscal results, as the annual revenues from this source range between just 11 and 14 million euros.
The tax is currently imposed on buyers of secondary residences (primary residences are exempted) and concerns properties whose construction license was issued after January 1, 2006.
Older properties only incur a transaction tax that has now dropped to 3 percent, from 10 percent up until 2013. Consequently there is a 20 percent difference in the tax imposed on new properties from that on older ones, leading buyers to opt for older residential property at the expense of construction activity.