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Rehn: revision of property values postponed for 2016 for purposes of taxation

OK. Here the deal between the Troika and the Greek governments of the last three years. Those fine gentlemen in Brussels (EU), in Washington (IMF) and Frankfurt (ECB) will decide how much my home is worth and they will tax it accordingly. Even though they have never neither visited my home, nor came even close to my neighborhood. And they will tax it according to wrong calculations and values just because I have to pay what the Greek governments wasted all over the years.

Let’s say my home (3BR, 130 sqm) had a value 0f 300,000 euro ten years ago. Should I decide to sell it today, in order to come up with my obligations towards the state and Greece’s lenders, I wouldn’t be able to do it for more than 200K-180K euro.

Because amid the deepest economic- and debt-crisis the value of my home has sharply decreased. The real estate market broke down long ago. Hardly somebody buys a home and not even a foreign investor would be interested to throw a euro into my no-name neighborhood in the Greek capital Athens, an average middle-class suburb without big green gardens and blue swimming pools.

The commercial value of my home is down. Respectively also the objective value of my property has sank. Why there is a gap between the C-value and the O-value I am not going to explain here. A fact is a fact.

When it comes to taxation based on the objective value of my property, both Greece’s lenders and the Greek finance ministry calculate the taxes according to values valid ten years ago. Before the crisis.

Correct! It’s the over taxation of everything that walks, crawls, swims and flies, that I’ am talking about.

According to the loan agreement of 2010, if I am not mistaken, the objective values of real estate were supposed to be revised in 2012. They were supposed to revised upwards, a measure that was based on the wrong assumption of the Troika that the commercial values would go up and therefore the objective values had to harmonize with the wrong assumption of the Troika.

The Greek crisis and the Troika’s loan agreements brought upside down not only our Greek lives but also the commercial and objective property values.

noble suburbs Ekali Vouliagmeni: objective values 30-25% higher than commercial values

average middle-, working-class Peristeri, Ilion: objective values 54%-80% lower than commercial values

So what does the Troika thinking to do? It will postponed the already postponed harmonization of objective values – that have to be revised downwards and not upwards – for 2016.

This was stated by EU Commissioner for Economic and Monetary Affairs, Olli Rehn to relevant question posed by Theodoros Skylakakis, MEP group ” Alliance of Liberals and Democrats for Europe”.

Olli Rehn’s answer: “Greek authorities continue to work on the formal procedure to review the assessed value of property in order to better align with market prices . This typical process applies for purposes of property taxation for the financial year 2016 . “

For those who did not understand: the property taxation will continue according to no-more-existent commercial values and objective values for the sole purpose that the Troika collects taxes via the Greek finance ministry.

According to unified tax to be imposed as of 1.1.2014 all homeowners will pay a rent to live in their own home.
FinMin Yiannis Stournaras and his team have not visited my home so far and I don’t intend to invite them for tea and cookies either.
PS I don’t really understand why I can to pay property taxes except to municipalities, when I have no profit from my own home.

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2 comments

  1. Sally Constantine

    This is outrageous – the people of Greece should say NO and refuse to accept this crazy proposition.

  2. First: in an awful lot of countries you pay some kind of tax to live in your own home.

    Second: You are missing the starting point.

    Even when we bought our house, 6 years ago, it was the norm to pay way more for a property then the official papers showed. I know that I was flabbergasted when I learned about it. Say the asking price for a house was 140.000 euro the deed would show only 70.000. And on that 70.000 all taxes and levies were based.
    I didn’t want anything to do with it and wanted to have the full amount we paid in the deed. Then we ran into a wall. Not so much from the buyer. But from banks, lawyers and notary public. They all assured me that this was the legal way to do this kind of business in Greece and I just had to go along with it.
    As we were paying already our income tax in Greece and had established our business here, we took the advice and went along with it. Because when even the notary public assures you that this is the legal way…
    But of course, it wasn’t and it still isn’t. It’s just one of that zillion things in Greece that are not what it seems to be.

    When the deal with the Troika was made they also knew. And that raising of the level of the official objective property value to the REAL commercial value was part of the deal. It was one of the many things that had to be corrected.

    Yes, you are right, that the prices of property now dropped through the bottom. And are for a lot of properties now way below that value in the papers at your local notary public. And yes, the ‘objective property values’ should come down. And everything is fake like it was before. But then we all profited. Now we suffer. Not all. Like always there seem to be a substantial part of the Greek population that still buys, sells and lives like there is no crisis at all. Thanks to the fact that they still pay no taxes.

    And that’s partly how I read Rehn’s answer. He is telling us that the Greek authorities still have no working procedure to set a real objective value… So, like so often, people seem to bark at the wrong tree.