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New Tax-Shock: Greece’s Property Owners to Pay “Rent” for Living in their Own Homes

Greece’ property owners will become “tenants” in their own homes and pay “rent” in form of property taxes, should Samaras government plans on property taxation come true. The country’s economic team plans to unify all different taxes and fees and emergency levies that already lay heavy on the shoulders of real estate owners living in Greece. 

The new single property tax will replace the following property taxes on annual basis: 

  • The FAP yearly charges owners of homes and land plots with  0.2% up to 2% of the objective value of the property after the amount of 200,000 euro (of property value) is being deducted as tax free.
  • The Emergency Property Tax (via electricity bills) is applied to home properties and commercial real estates, charging 0.5 to 20 euro per square meter depending on the property value zone and the age of the building.
  • ETAK (Unified Fee for Property)
  • TAP (Property Fee)

                *for the last two I can’t tell you right now how they are calculated

The new unified property tax will be applied to all kinds of real estate and properties: houses, apartments, commercial real estate, fields, landplots and other kinds of property such a pastoral fields – even those outside towns or settlements including land areas with installed solar panels (photovoltaic).

Exempted will be agricultural fields in rural areas that are cultivated.

Even though Greece’s economic team is still working out the issue, the new system will tax even property that was exempted until now and will cancel the tax free amount of 200,000 euro.

The new tax will affect 5.6 million natural and 1 million legal persons with the aim that the Finance Ministry will collect 3 billion euro on  annual basis beginning 2013.

The new property tax is being in the context of new taxation system [that is being ‘sold’ to Greeks by the government and the Troika as more ‘fair and just’]. (source: Eleftheros Typos via Real.gr, Proto Thema, News247.gr)

So far it has not been revealed how new tax will be calculated. But if one takes into consideration that the tax free amount will be scrapped, a roughly estimated “rent of 200-300 euro” per month for a property owner of 100 sq.m., for example, is not in sphere of imagination and sci-fin-fiction.

I remember -maybe 2-3 months ago, some reports in the Greek press saying that the Troika wanted to impose a ‘rent’ to property owners.

There is also one legal trick in the whole single property tax: The Supreme Administration Court in Greece had ruled last winter, that the Emergency Property Tax was in comply with the Greek Constitution only because it was temporary for two years (2011, 2012). The Greek Finance Ministry would violate the Constitution, if it would impose it also for 2013. So the easy legal solution is to unify the property taxes and collect E.P.T. under another name.  

 

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16 comments

  1. That sounds like a fair tax. If you’re living 100 sq.m house and can’t pay such a ridiculously low tax like 200 euros, you’re obviously living in house that is too big (and expensive) for you, i.e. you are living way beyond your means. It’s time to change for a smaller and cheaper house. In economics that is called resource allocation. Property tax like this should be much higher, but I understand that income has sank so much in Greece now so that you must start with low percentages.

  2. increasing property taxes also from the first euro for those living in their own home will hit especially fixed income low pensioners. Further more now that wages have dropped down to 500-700 euro it would be equally hard to have to pay rent.It would be more fair to increase these taxes for houses that are rented.

  3. KTG, are these numbers monthly or per year ? Thanks.

  4. the estimated 200-300 euro? per month. the number above are on annual basis.

  5. The next step would be for people finding other means and cutting electricity completely off… Candles, wood furnaces etc…

  6. KTG wrote:
    “It would be more fair to increase these taxes for houses that are rented.”

    What? Do you mean to say that those who rent their apartment don’t have to pay this new property tax? If this this is true, the tax is absurd. It will create an incentive for the property owners to start renting their apartments to each other just in order to escape taxes. Makes no sense.

    I suppose everybody (who owns a property) must pay the property tax no matter is he living in the house, renting it or keeping it empty (in the last case the tax should be much higher).

    I have no sympathy low income pensioner who owns 300K estate who can’t pay 200 euros tax. For heavens sake, sell your property and you can travel all over the world and live like a king for the rest of your life with the money.

    My salary is about 3500 euros per month and I just about dream buying 20 sq.m flat and payng for it would take 20 years (with that salary).

  7. I mean, property owners using their home as main home should be exempted, and taxes should be collected for owners of more real estates.

  8. but I have sympathy for low income pensioners of 600 euro/month, no social welfare benefits or other source of income. Wait until you are up to 85. you tell me whether you still have the power to travel around like a king for the rest of your life, provided you know when it ends.
    3500 euro/m and can’t afford to buy a 20sqm flat? that’s either bad management or flats where you live are extremely expensive and overvalued. Buy per internet in Germany, 20-40K for 25 sqm.

  9. Government is working on this, full time. Nearly there…

  10. Your salary per month is nearly 17% higher than what 25% of the population in the country is made live on PER YEAR. And then there are of course the thousands who are made live on NOTHING.
    At least you can still dream of buying a flat. For thousands of others in this country the next meal is nothing more than a dream…
    Have you any idea how many low income pensioners have taken their siblings, children and grand children back in to their alleged 300K estate because they have nowhere else to go?

  11. Well, of course you can by a whole block of flats for 1K in Latvian countryside, but around where I live 20 sq.m flat costs around 150 000 euros. I don’t have a job in Latvian countryside. And of course I could go to a bank and get a loan (I have asked this, and they would give me loan up to 160 000 euros), but servicing this kind of loan would be expensive (and too risky in this economic situation) so I rather rent my flat and pay up my student loan. (But notice: I couldn’t compete financially even with a 200K property owner with zero income, not to mention low income, but actually very rich, Greek pensioner with 200K apartment.)

    My point was only that there two economics: the economics of property and the economics of labour. The economics of labour says tax the property income: land tax, capital income tax etc. The economics of property wants to tax wage income, value added and all kinds consumer products etc. I’m in favour of the economics of labour.

    Crisis situation means the expropriation of the middle classes. The fact that KD/Pasok/DemLeft govt. puts in place this expropriation will all the more alienate middle classes from their politics (I suppose at least). This squeeze will bring the class antagonism to the fore: you’re either with interests of labour or with propertied interests.

    I have much more sympathy with Greek student, or unemployed or worker or pensioner without property. I suppose their situation is really dire. But someone who owns 200K property? You must be kidding…

  12. You are of course muddling a few things up here.
    Firstly, we are talking pensioners. There are 2 scenario’s possible here. When they purchased their house, they took the risk with loans etc and most likely worked their butt off the pay for it, however much it was. Or, other scenario, they inherited the house from someone in the family, which is a very normal situation. If they took the risk with banks etc, the price they paid in the days they were working would have been far less than the 200K you have dropped down to now, from you initial 300K.

    Secondly, the 200K is a valuation put on that property by property gamblers, not the owners. A pensioner living in his/her own house is not a property speculator, it is somebody who wants to spend the rest of their days in peace and quiet, without hassles and worries.
    For that pensioner, the house is worth a lot more than 200K. It is worth everything, and is probably everything they have.

    Thirdly, your labour vs property economics makes some sense when dealing with property speculators, guys with port folios worth billions, who make no bones about putting somebody out of a house if it means they can make more money. It most definitely does not apply to the single house owner, pensioner or not. The single house owner, in their minds, do not own a house. They own a home. Big difference, and one that must be respected instead of taxed!

  13. What about people like us, here on embattled Crete. We rent a property for 250 euros per month. If the owner of our apartment must pay this same amount in tax, then surely we would , in reality be paying the tax, as the landlord would have no option but to raise the rent, or make zero from his property. Its ridiculous.

  14. yes, that’s a point too concerning the rents. Due to taxes will have to go up, while tenants income decreases. Excellent tax scheme from whichever side you look at.
    thanks for the rent aspect.

  15. George Mamouzellos

    Bullshit. So if that house has been in your family for 5 generations, your kids move out, and your husband dies, you are forced to sell the house rather than live there until you die and pass it on to your kids? And what do you mean, “beyond your means”? It has been your family house for 150 years – it belongs to you and your family, not the bloody government