Prime Minister Kyriakos Mitsotakis announced a three-year suspension of Value Added Tax (VAT) on new building permits but also on unsold properties built after 1. January 2006. Aim of the measure is to ease the huge stock of unsold properties and stimulate the construction activity. The exemption covers all real estate properties in the Greek market.
“VAT on all new building permits is suspended for the next three years, as it is for older permits issued after January 1, 2006. In other words, all new constructions are exempt from VAT as are properties built the last 14 years that have not been sold yet,” Mitsotakis said on Wendesday evening.
He added that the VAT exception is also valid for “antiparochi”, where owners provide the land to builders in exchange for a number of future apartments.
In all cases, Mitsotakis asserted, the exemption from VAT would be claimed with a simple application.
The VAT on real estate was introduced in 2006.
The measure aims to revive the real estate market and boost the construction activity.
The measure is also expected to boost the Golden Visa purchases as the non-EU buyer has to invest 250,000 euros in property purchases in order to be granted a visa.The VAT was added to this price.
Mitsotakis added that the real estate market is recovering, with prices of property in Greece increasing by 7.7% in the second quarter of 2019.
Greek media report that the VAT exception will affect 60,000 – 100,000 real estate objects.
Officially the VAT is at 24%, however, the exemption will not decrease real estate prices also by 24% but rather by 7%.
Construction experts said on TV that constructors used to add a rate lower than the real VAT.
In addition to what the PM announcement, media report that exempted from the 3% property transfer tax are those who will purchase their “first residence” if the property value does not exceed €200,000 for single-person household. The threshold increases for families depending on the number of persons in the household.
Those purchasing real estate as a secondary or investment or holiday home will have to pay the 3% tax plus 10% of the transfer tax for the municipalities.
I wanted to buy a new apartment in Athens, when the constructor told me about the 24% tax I said no, it is out of budget, so his solution was simple: to declare a much lower price and get the difference cash. The real estate agent had another proposal: to find a greek citizen who buys the house first and then sells it immediately after, as all Chinese people do, he said. There are many other (illegal) ways commonly used to avoid this tax, they told me. So this is what happens when taxes are too high, and people are not honest.