Significant changes-reductions in rent taxation, in response to the housing crisis and the increased prices that mainly affect young couples and students, are being considered by the Ministry of Finance and are expected to be announced by the Prime Minister from the stage of the 88th International Exhibition of Thessaloniki Kyriakos Mitsotakis.
There are several proposals on the table, however, according to exclusive information from “Vima”, at this stage the government is considering reducing the high tax rates applied to owners who collect annual rents of more than 12,000 euros, as based on on the current scale for incomes up to 12,000 euros a rate of 15% is applied, which increases to 35% for incomes from 12,001 to 35,000 euros and to 45% for rents from 35,001 euros and above.
With the changes to the taxation of rental income in the Ministry of Finance they hope to give a strong incentive to property owners on the one hand to drop prices, on the other hand to “fall” on the market thousands of foreclosed homes, which create distortions in the market, limiting supply and increasing demand, driving prices up. However, the Ministry of Finance has rejected an earlier request-proposal of the Panhellenic Federation of Real Estate Owners, according to which those owners who sell their closed properties for rent should be exempted from income tax for three years.
According to official data, 750,000 properties are declared to AADE as vacant/closed, while based on recent data from the tax authorities, they state that closed and unelectrified properties across the country may reach as many as 900,000. At the same time, in Karageorgi, Serbia, they have decided to apply for the first time objective real estate values in 505 areas and settlements located in Greek territory and to “freeze” the prices of the Tax Office in the existing zones both for this year and for 2025 in order not to created a new spiral of price increases in sales and rents.
Small “basket” in TIF
On the other hand, the overall “basket” of the TIF that the Prime Minister will announce is expected to be small compared to other years, as the fiscal space is directly linked to the data and forecasts of the European Commission regarding the amount of primary expenses. These expenses will be described in the four-year stability and development program that the government will submit to the Commission and which will have to strictly adhere to the new rules.
It is worth emphasizing that the relevant macroeconomic figures are still under negotiation with the European Commission in order to be included – once Greece and the Commission reach a final agreement – in the new Medium-Term Fiscal Strategy Framework 2025-2028 (four-year duration), which must be submitted to Brussels until September 21.
Moreover, the new state budget for 2025 will also be determined from the final data of the new four-year program, while it is estimated that on an annual basis the fiscal space through the increased expenses for benefits, salary increases and pensions, coverage of various needs (emergency or not ) will amount to 3 billion euros.
From the “pie” of 3 billion euros, the government aims to promote measures for the Demographics, part of which is expected to be the reduction of rent taxation and not only that.
The aim is to give owners a strong incentive, on the one hand, to lower prices, and on the other hand, to “fall” thousands of foreclosed homes onto the market
As “To Vima tis Kyriaki” had recently revealed, among the measures being considered to change the gloomy picture recorded by a recent study by the Institute of Demographic Research and Studies (IDEM), where the natural balance (births – deaths) has a negative sign, is that there be an expansion of allowances for three and many children, that tax incentives be provided to new families, such as increased tax-free, lower rates, etc., but also that targeted incentives and benefits be applied to new couples for having a first and second child.
Part of the 3 billion euros will also be directed to cover the costs of the necessary adjustments to the taxation of the self-employed and freelancers, as well as the problems and injustices that have arisen during the first year of application of the new presumptions – minimum incomes.
With the completion of the submission of tax returns by approximately 6,550,000 individuals and households, the Ministry of Finance has already begun processing the data concerning the self-employed in order to proceed in the next period with the necessary corrections regarding this year’s incomes to be declared in next year.
Among the key changes expected to be pushed is to freeze the increases expected to occur in the minimum presumptive income due to the minimum wage adjustment, to determine the minimum presumptive income to take into account the family incomes of freelancers, which is not the case today, and to be included in the total incomes, in addition to those derived from salaried services, from pensions or from agricultural activities, and those derived from rents, interest on deposits, capital gains from stocks, bonds, etc.
Insurance contributions
At the same time, the government in 2025 will proceed to reduce insurance contributions by 0.5% at a budgetary cost of 225 million euros, to completely abolish the professional tax for professionals at a cost of 120 million euros, to permanently return the Special Consumption Tax ( VAT) to farmers at a cost of 100 million euros, to the increase of the student housing allowance by 15 million euros and to the suspension of VAT on constructions at a cost of 20 million euros.
At the same time, it has calculated for 2025 an expenditure of 400 million euros from the state budget for the third annual increase in pensions in a row, which is expected to vary on average at 2.5%-3%, depending on this year’s increase GDP but also inflation.
In the package of measures to be announced by the Prime Minister from the TIF, there will be a provision to support those vulnerable to the increase in energy costs as well as the ongoing effects of the war in Ukraine and the Middle East, while new measures against precision in products are also being considered of supermarkets.
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