Taxes add to realty woes
Athens Plus, 11 June 2010

About 3 million taxpayers will begin receiving notices for payment of the ETAK property tax in the next few weeks. Additionally, those whose property assets exceed 400,000 euros in value will be called upon to pay a one- off duty ranging between 0.1 and 0.9 percent to help the government replenish its empty coffers. But that is not all for the owners of extensive property assets: By year-end, they will also be burdened with the new real estate tax, known as FAP, introduced in the last tax bill.

In total, the government hopes to collect no less than 1.3 billion euros from property owners this year - about 500 million from ETAK, 180 million from the one-off duty and 680 million from FAP.

However, some 15,000 taxpayers have yet to receive the ETAK payment notice for 2008. They will have to visit the tax office where they are registered by June 15, in order to submit the E9 form again, listing the properties they owned on January 1, 2008. The 2009 ETAK is expected to be higher for many, as it has been calculated using stricter criteria. Separately, the government is preparing to revise its official, so- called objective property rates applied for tax purposes according to area, which were last updated in 2007 and are now estimated to diverge from actual market rates by up to 200 percent. The average upward revision, which is expected to be slated in two installments - beginning either in September or early next year - is projected to be around 50 percent and will affect taxpayers in a number of ways. First, it will impact property sales, parental transfers and inheritances, and secondly, it will bring many taxpayers into the large real estate tax bracket, dealing a further blow to the already frozen property market.

By updating the objective rates, the Finance Ministry hopes to capture the difference from actual market rates which many developers pocket tax-free when they sell. The widest gap between objective and market rates, around 200 percent, is calculated in the eastern Athens neighborhood of Vyronas, with the highest objective rate standing at 1,600 euros per square meter and the average market rate at 2,700 euros/sq.m.

Other areas with large gaps are Peristeri, Paiania and Korydallos.

According to the Federation of Building Developers of Greece, the downturn in the property market has led to the closure of 734 member businesses since the beginning of the year - some 5 percent of the total.

Market players take the view that prices will keep dropping as the recession deepens. Sales were down more than 40 percent year-on-year in the first five months of 2010.