The tax exemptions announced by the government related to the market came into effect Real estateapproved and implemented this year.
It is expected to extend the “frozen” value-added tax and capital gains tax on real estate, as well as the implementation of 40% discounts for those who renovate real estate. Suspending the 15% capital gains tax on property sales for another two years adds an extra boost to the market.
The industry is nearing peak times of 2007, that is, before the economic crisis hit the country. According to the interim report of the Bank of Greece, the increase in prices and demand for luxury real estate is linked to the influx of foreign capital. In the first nine months of 2022, apartment prices increased by 10.4% year-on-year, compared to an increase of 6.8% in the corresponding period of 2021.
The Spitogatos Property Index (SPI) for the fourth quarter from the previous year shows that average asking sale prices increased by 9.35% in Attica and 8.6% in Thessaloniki. During October-December 2022, the average price was highest in the southern suburbs of Athens, at €3,261 per square metre. The lowest price was in Florina with 579 euros. Since 2018, sales prices have increased by 31.8% in Attica and by 52.6% in Thessaloniki.
The Bank of England reports strong investment interest, but the market faces major uncertainties (Ukraine). It is estimated that the pressure of net investment returns and expected capital gains from real estate, along with the increase in interest rates and uncertainty, will gradually push some investors into a wait-and-see attitude.
Among the interventions are 1.77 billion euros, which will be directed to energy savings. It relates to the expenses of installing photovoltaic panels in homes, companies and agricultural holdings (the financial cost is 700 million euros). It is expected to extend the “Recycle / Transform” program (financial cost of 140 million euros), the affordable housing program for young people, the “Renovation / Saving” and “Renovation / Rent” programs (with a financial cost of 350 million euros for 2023). Subsidies are provided for home renovation and energy savings, as well as a low-interest loan program for the purchase of a first home by young people and young couples up to 39 years old.
Capital gains tax
New suspension of capital gains tax of 15% on property sales through 2024. It is charged to sellers and results from the sale of property at a price higher than the purchase price.
Value added tax on new buildings
The application of VAT on real estate is suspended until the end of 2024 and the real estate transfer tax is levied. It relates to all unused real estate of the manufacturer.
40% tax deduction for property renovation
In 2023 and 2024, owners who embark on an energy and function upgrade to their properties are given a 40% income tax deduction. The deduction is spread over tax returns for the next four years. 40% of the expenses that taxpayers pay in one year for the energy business and job promotion of their properties are deducted from the income tax debt for the four years. The maximum total expense recognized is €16,000, with a maximum deduction amount of €6,400.
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