Low tax on rent income an added incentive for foreign home buyers
As the real estate market increasingly becomes a global activity, many foreigners are starting to buy properties in Greece, particularly holiday homes, seeing it also as an attractive investment. In recent years, hundreds of thousands of holiday homes have been purchased by foreigners in many countries around the world, particularly in SE Europe. The recent collapse of Spain’s holiday home market has led to many potential property buyers considering alternative locations, including Greece. Although Greece’s holiday home market still has a long way to go in terms of development, the country enjoys a significant tax advantage for foreigners willing to treat a holiday home also as an investment. An increasingly popular practice is to lease a home for the months it is not being used, e.g. in the winter. But here an important decider is the level of the return minus the amount of tax they would have to pay. Greece ranks among the relatively «inexpensive» countries given that tax imposed on income from rent is currently at 15 percent. This bracket applies exclusively for foreigners and non-residents in Greece, who have no other source of income here. The rate has been calculated on the basis of income from a monthly rent of -1,500 or -18,000 annually. Excluding those states with zero tax, such as the UK, Cyprus and Latvia, Greece is currently in 31st position among 75 countries with respect to the amount of tax on rents. On a global level, Switzerland – with a rate of 48.56 percent – levies the highest tax on income from rents, and in cases where the monthly income from rents is over -12,000, the tax rises to 54.5 percent. Along with Kenya and Tanzania, which also charge high taxes on rents, the US is ranked in the top three in the list of highest taxes, at 30 percent, a rate which also applies in Russia, irrespective of the amount of income. Spain, with a tax on rent income at 24 percent, Turkey with 14.61 percent and Greece with 15 percent have been seeking to attract foreign property buyers, but now a more decisive role will be played by the respective tax rates as prospective buyers seek also some income from their real estate investment.
