ECONOMY

New tax rates for property

On January 1, the government will announce the new adjustment to the officially determined values of properties depending on the area (used for tax purposes and known as «objective prices»), Economy and Finance Deputy Minister Antonis Bezas said yesterday. The adjustment concerns all properties, whether within town planning or outside it, and is the follow-up to last winter’s adjustment. The government has stated it wants to raise objective prices gradually, within a three-year period that started in 2006. Bezas told state TV that the increases in objective values for properties within town-planning zones will be smaller than last winter’s and, according to sources, will not exceed an average of 25 percent. Yet the increases in certain areas will be greater due to the bigger difference between objective and commercial prices. In other instances, the rise will be smaller. The same policy will apply to farms and plots outside town-planning zones, he noted. These developments are expected to increase demand in the property market by the end of the year for the tax burden from the objective price adjustment to be reduced. The average rise of 25 percent, as sources suggest, will mean a total mean increase of about 60 percent. Even with this adjustment, though, the difference in market prices remains great in most areas, allowing for a third adjustment in 2008. However, this may be postponed until after the general elections scheduled in early 2008. The gap between objective and market prices remains wide, particularly at minimum rates. At Perama, in Piraeus, the minimum zone rate was at 600 euros per square meter last year, while in the market it stood at 1,500 euros/sq.m., that is, a 150 percent difference. Another candidate for adjustment is Haidari, in western Athens, where the minimum zone rate is now at 750 euros/sq.m., while the commercial value starts from 1,800 euros/sq.m. As this additional burden will also concern main-residence owners, the Economy Ministry is considering a rise in the tax-free ceiling for the purchase of a main residence by about 10 percent. It is also planning a 50 percent increase of the minimum construction cost, set officially for tax purposes, in order to beat tax evasion. The increase will be spread over three years, starting from 2007.