The scenario concerning the postponement of reforms to the real estate market’s taxation system is back on the table. Given that the coronavirus pandemic has locked down economic activity and reduced property transfers to a bare minimum, the argument that it is impossible to make correct valuations of property values is increasingly gaining ground.
Property surveyors have already delivered their recommendations to the Finance Ministry, but in many cases there a significant margins of error identified due to the conditions generated by the pandemic.
The planned changes to the taxation of properties have two main pillars. The first concerns the expansion of the system determining the official real estate prices used for tax purposes (known as “objective values”) to the areas where the comparative system continues to apply. This section of the reform is likely to continue as planned this year, as the areas outside the objective value system have suffered from unfair taxation. The expansion of the system of objective values to new areas will create additional taxable materials for the calculation of the Single Property Tax (ENFIA).
The other pillar of the reforms regards the further reduction of the ENFIA calculation rates, which is directly associated to the reassessment of the objective values of properties across the country. This year’s state budget has provided for exactly the same revenues from property taxes as last year.
The state will notify owners of more dues through ENFIA and the supplementary property tax, and then return them via the reduction of the ENFIA calculation rates, carried out by way of raising the reduction coefficients of the final dues that currently range between 20% and 30%.
Property taxation is a particularly sensitive political matter. Consequently, any final decisions will also be taken on the grounds of political developments over the coming period. Yet regardless of the final decisions, no changes are expected this year as far as the property transfer tax is concerned. Even if the objective values are adjusted and affect the calculation of transfer taxes, the new values will start applying for that purpose from 2022.