OPINION

Real estate fever misses the point

The real estate market is getting rather overheated. Everyone is trying to finish their transactions before the end of the year before the imposition of VAT on new buildings, due to come into effect on January 1, and an increase in the «objective values» of properties (used for tax purposes). This market fever is a boon for real estate professionals, banks offering mortgages but also the state, which levies transfer tax and parental transfer tax. All these interested parties have a good reason to encourage the frenzied rush for properties. However, the progress of the real estate market in the short term is rather complicated, and does not really justify the current tumult in the sector. The imposition of VAT will only start influencing property prices a couple of years from now. And, in any case, this tax will only apply to buildings constructed after January 1, 2006. All other properties will be sold without VAT but with the imposition of transfer tax. Also, first-time buyers – who account for the overwhelming majority of purchasers at the moment – will remain exempt from paying VAT on property purchases, irrespective of the age of the building. The imposition of VAT is only really of concern to contractors and other real estate professionals as it forces them into the tax system, putting an end to the singular fiscal asylum they have enjoyed for so many years…