Property values jump

The government yesterday made public a new set of figures that determine the tax payable on property transfers as it aims to use the country’s booming property market to help improve its budgetary health. Called objective values, the tax authorities use these figures to determine a minimum value for every piece of real estate, on which tax is applied. The new objective values, presented by the Ministry of Economy and Finance, show an average increase of 30 percent from existing rates, effective as of January 1. Increases differ depending on the area in which the property is located. Objective values in Thessaloniki will rise by 31 percent as of next week, while in some parts of Athens, such as the beachside suburb of Hellenikon, the increase reaches as high as 70 percent. The government has promised to raise objective values again, but gradually over the next three years to avoid provoking a shock to the market. In an attempt to sweeten the deal, tax-free thresholds on some property transactions, such as for first-time buyers, will also rise in the new year. Market experts, however, say that the new costs far outweigh any benefits from the imminent changes. Investor speculation ahead of upcoming value hikes shifted trading activity in the property sector a gear higher in 2005, pulling prices upward. Opposition parties have accused the government of doing this on purpose and giving the economy an artificial boost. «The government not only takes back the tax cuts, but burdens the market with the rise in objective values,» said PASOK’s Vasso Papandreou. The higher values mean that more revenues will flow into state coffers in a year where Greece must reduce its budget deficit to below 3 percent of output or otherwise face steep penalties from the European Union. Revenues from property taxes in 2006 are expected to double from this year. The increase in objective values is the first since 2001.