Greece fails on tax incentives for home buyers

The tax incentives being offered in Greece today for the acquisition of a residential property are virtually zero, according to a recent analysis by the European Commission.

In its study, Brussels uses an index to measure the incentives presented to house buyers in every European Union country that factors in transaction taxes, ownership taxes and tax exemptions for mortgage interest. With the incentive index readings ranging between 0 and 3, Greece has scored 0 since 2012, along with France and Spain. Bulgaria, Swe- den and the Netherlands are currently on a score of 3.

In fact, 2012 was the first year that the Single Property Tax (now known as ENFIA) was fully implemented, sending property tax revenues soaring. Budget data showed revenues of 2.8 billion euros in 2012, against 1.1 billion in 2011 and just 500 million in 2010. Expected property tax takings this year come to 3.8 billion euros.

Greece has witnessed a full reversal in the way that properties are taxed, as the weight has been shifted from transactions to ownership. In 2009, besides the prop- erty ownership tax known as ETAK, the state also collected some 1 billion euros from transaction tax, at a rate of 10 percent. Today, transaction tax revenues are no more than 100 million euros, with the tax rate down to 3 percent and the number of transactions dropping from 120,000 late last decade to some 10,000 nowadays. Notably, this year’s ENFIA is increasing the burden on the owners of properties in cities and towns, in comparison with owners of plots outside urbanized zones.