New objective values

The Ministry of Economy and Finance will publish today the new «objective property values» that are expected to be between 25 and 30 percent higher, on average, than the previous ones. (Objective values are set for taxation purposes because of the impossibility of taxing people and corporations on the actual value of the properties since transactions are not fully recorded. Objective value always lag actual market value, usually by about 30 percent. In recent years, however, the lag had increased considerably, leading the government to update the objective values for the first time since March 2001.) According to sources, the greatest rise will concern Irodou Attikou Street, in central Athens, where the objective value for properties will rise to 10,200 euros per square meter from 4,200 euros per sq.m. at present, a rise of 130 percent. In areas close to metro stations, objective values will rise nearly 70 percent, while higher rises (up to 120 percent) will take place in some southern seaside suburbs. The ministry will publish detailed price lists for Attica, but will provide only the highest and lowest values for the rest of the country. The new values will take effect on January 1, 2006. Exception is made for farmland or places outside city planning limits, where the new prices will take effect later in January. According to a ministry circular, those who have informed tax authorities by the end of the year that they intend to buy or sell property and have already been assessed transfer tax can sign contracts at the old objective values by the end of February. On top of the rise in objective values comes the imposition of 19 percent VAT on new constructions. The state also wants to increase other cost factors in construction so as to increase its VAT revenue by 50 percent. These changes have been widely condemned by construction firms who fear that the imposition of so many extra charges will lead to a market downturn. For its part, the government says it has increased tax breaks.