Trans­fer tax to be based on ac­tual prop­erty cost, not ob­jec­tive value

Kathimerini English - - Front Page - BY PROKOPIS HATZINIKOLAOU

The gov­ern­ment in­tends to pro­vide a boost to the lo­cal real es­tate mar­ket by re­duc­ing the tax on prop­erty trans­ac­tions as of 2015, with the aim of at­tract­ing for­eign in­vestors by cut­ting the cost of taxes paid upon sign­ing of con­tracts.

Sources say that the gov­ern­ment’s plan hinges on dis­as­so­ci­at­ing the prop­erty trans­fer tax from so-called ob­jec­tive val­ues, i.e. the prop­erty rates used for tax pur­poses. From next year the trans­fer tax will be based on the ac­tual sale price of each prop­erty as de­tailed on the con­tract rather than on its es­ti­mated value.

Mar­ket pro­fes­sion­als have for years ar­gued that it is in­com­pre­hen­si­ble why the trans­fer tax is cal­cu­lated on the ba­sis of the ob­jec­tive value while the cap­i­tal gains tax is based on the ac­tual sale price. At the same time, the re­cent in­ter­est shown by for­eign in­vestors in hol­i­day homes is of­ten dulled when they see two dif­fer­ent prices on con­tracts – the ac­tual cost and the ob­jec­tive value – as the prac­tice seems en­tirely ir­ra­tional to them.

Ac­cord­ing to the new reg­u­la­tion, which will be en­acted into law, the trans­fer tax, cur­rently amount­ing to 3 per­cent of the ob­jec­tive value, will be brought down to 3 per­cent of the ac­tual sell­ing price in­stead. For pri­mary res­i­dences only, the tax­able amount con­cerns the cost of the prop­erty above the tax-free thresh­old of 200,000 euros for sin­gle tax­pay­ers, ris­ing to 250,000 euros for mar­ried ones and grow­ing by another 25,000 euros for ev­ery de­pen­dent child.

This means that ob­jec­tive val­ues will in essence ap­ply only to the cal­cu­la­tion of the sin­gle prop- erty tax, mu­nic­i­pal tax, etc. Once the new, au­to­matic sys­tem of ob­jec­tive val­ues is put into place, prob­a­bly not be­fore July 2016, com­mer­cial and ob­jec­tive rates will be aligned into one price, which will serve as the ba­sis for cal­cu­lat­ing all taxes on prop­erty.

Mar­ket ex­perts note that any ini­tia­tive that leads to the re­duc­tion of the tax bur­den and to smooth­ing out the dis­tor­tions in the prop­erty mar­ket will give it a much-needed boost and could grad­u­ally lead to an in­crease in jobs.

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