Sales of real estate with the same objective values, without VAT and without capital gains tax will be carried out by Greeks and foreigners until the end of 2025. Despite the price rally that continues in the real estate market, especially in areas where there is high demand, the government has chosen not to tamper with objective values and keep the VAT on newly built properties and capital gains tax in the drawer. And this is because, according to competent sources, the problem of housing remains acute as there are 200,000 homes missing from the market, but also the need to continue the upward pace of investments in real estate.
With the freeze on property values, 24% VAT and capital gains tax, property transfers will remain “cheap” until the end of next year. An increase in targets to market price levels, especially in areas where the gap has opened significantly, would skyrocket the burden on taxpayers even in cases covered by the tax-free threshold as it would significantly inflate costs (notary fees, Land Registry transfer fees, broker’s fee) for those who buy a property or write a house to their children or grandchildren.
Housing crisis and measures
Thus, with real estate prices moving towards new historic highs recording an increase of over 66% from the “lows” of 2017, the interventions which are coming to be added to the package of measures to deal with the housing crisis and the strengthening of the market that Prime Minister Kyriakos Mitsotakis is expected to present at the TIF, foresee:
- “Freeze” property valuations at current levels until the end of 2025. Even if the finance staff decides to go ahead with price adjustments within the next year, the new valuations for property transfers will be activated in 2026.
- Extension of VAT suspension on real estate transfers. The government has decided to suspend until the end of 2025 the imposition of 24% VAT on transfers of new buildings. The VAT “freeze” will apply to all of the developer’s undisclosed properties, from all building permits that have been issued and concern either his own properties or properties that he builds with the consideration system, up to the application for suspension. According to officials of the Ministry of Finance, the aim of the measure is to strengthen the resilience of the building industry in the face of turbulence from the increase in prices of raw materials and the inflation of construction costs, and to strengthen its upward trajectory, as it is one of the main driving forces forces of economic development. For their part, real estate market players point out that the suspension of the 24% VAT on new buildings is a key ally and incentive for each builder and investor who wishes to invest in the Greek real estate market. By deactivating VAT, the cost of acquiring a home is significantly compressed, due to the lower burden on the buyer. For example, for a house worth 200,000 euros, the purchase cost with 24% VAT and transfer tax is 248,000 euros. With the suspension of VAT the price of the same property drops to €206,000, since only 3% transfer tax is imposed, so the buyer will pay €42,000 less or 17%.
- The capital gains tax is on hold. On the table of the economic staff is the scenario of postponing the application of the 15% capital gains tax on profits from the purchase and sale of real estate, until the end of 2025. Finance ministry sources consider the suspension of the measure almost certain, which expires on December 31, 2024 , noting that it will curb the rise in real estate prices and support transactions by giving the real estate market a breather.
Source: Premium edition TA NEA
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