Taxation changes in property transfers
Athens Plus, 22 January 2010

The Finance Ministry is mulling radical changes to how the value of transferred property is calculated for tax purposes, sources said this week.

A committee looking into the matter met on Monday to examine the idea of reintroducing the calculation on the basis of actual market values, rather than the officially determined, so-called "objective" rates, which apply according to zone and are less than realistic because they are only updated every few years.

The president of the Panhellenic Federation of Property Owners (POMIDA), Stavros Paradias, proposed the application of "transaction coefficients" - different in each zone - that bring the lagging "objective" value up to par with the commercial value of the property transacted.

If for instance, the "objective" value in an expensive area has been determined as 4,000 euros per square meter but the commercial value is currently estimated at 4,600 euros, a transaction coefficient of 1.15 will be applied to produce a more realistic taxable value.

Other property levies, such as the large real estate tax, which will replace the present unified property levy, will be calculated on the basis of "objective" rates without the coefficient.

Meanwhile, the ministry is said to be planning to update the objective rates in June.

The government is also examining the setting of a new tax-free ceiling for the acquisition of a first home that will be connected with the "objective" value of the zone and the owner’s marital status. This is likely to be around 150,000-200,000 euros for unmarried owners and 200,000-300,000 euros for families. Increases will apply depending on the number of children.

The law in force now exempts all those acquiring a first home of up to 200 sq.m., irrespective of the value of the property.

The ministry also plans to abolish the automatic capital gains tax, ranging between 5 and 20 percent, which is applied on the difference between "objective" sale and acquisition prices.

Separately, the Panhellenic Federation of Property Owners welcomed in a statement last week’s withdrawal of the amendment concerning the tax on parental property transfers. The amendment provided for the determination of the tax at an unspecified date after the transfer.