Property purchases in Greece are now taxable at just 3%, under the new law which came into effect this January. This is an enormous reduction from the 8% on the first €20,000 of the property’s value and 10% for amounts beyond the first €20,000 under the previous tax regime.
Greece has been deep in recession for the past six years and has had to be bailed out by the EU-ECB-IMF troika. The recently passed tax measure is part of a series of structural reforms that it has agreed to undertake as condition for availing from a €240 billion rescue package from the troika.
Property prices have already dropped by 32% in Greece over the last four years, according to the country’s central bank. The new property tax law could drive them further down.
Foreign buyers of course benefit from a market collapse. “Over-taxation causes property devaluation, which works to the advantage of foreign investors who want to buy at very low prices," said Michalis Georgiou, a member of Greece’s real estate agent association Omase.
Iain Brand, Joint Managing Director of Direct Property Group (http://www.directpropertygroup.com.hk/), based in Hong Kong adds: “The new tax will not only benefit those who own an apartment in low to medium value areas, but also larger properties that were essentially paying a “double” tax, in the form of the current real estate tax and the emergency tax collected by DEI (Public Power Corporation). The reviewed tax will allow foreign investors to take full advantage of property devaluation. 2014 will be a crucial year for real estate in Greece. Prices will further drop by up to 20%.”
Already foreign buyers and investors from non-EU countries are being offered Greek residence permits for buying or renting property worth over €250,000.
Brand, of Direct Property Group Hong Kong, continues: “Despite the recent economic environment resulting in buyers being driven to safer locations, this massive tax reduction will make investment by foreign buyers extremely attractive.”
Global Property Guide reports Greece now holds the EU presidency. "At the end of the Greek presidency, Greece will be back on its feet and Europe will have taken a major step to exit its crisis," promised Prime Minister Antonis Samaras. "What was once Europe's 'weakest link' will be a symbol that Europe works, Europe can, and Europe will make it."
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