Greece is a land of opportunity for real estate investment. Everyone knows that the purchase price of real estate comes with fees and taxes. In order to help you to approach negotiations and costs, we provide you with the essential information on additional purchase costs in order to balance your project.
- 1 Taxes when buying real estate in Greece
- 2 Taxes and duties for homeowners in Greece
- 3 Taxes and levies for rental property investments in Greece
- 4 THE CASE OF PENSIONS AND TAX DOMICILIATIONS OF FOREIGNERS IN GREECE.
Taxes when buying real estate in Greece
When you buy real estate, you don’t just pay the price of the property. There are a few additional expenses that will need to be included in your initial budget.
The fees and taxes payable at the time of acquisition are a common principle to all countries. However, Greece has some peculiarities with which it is better to familiarize yourself before you start.
The duties transfer tax
This tax applies to goods considered as new and for which the building licence were issued before 2006. It obviously concerns also old goods, regardless of the date of issue of the building permit. Its fixed rate is 3.09%.
In the case of a new property for which the building permit was issued after 2006, we only speak of rights transfer and not of tax. The amount is equivalent to 23% of the “objective value” of the property.
This value is based on many factors, including location, area and architectural style of the new property. Other specifications may also be taken into consideration.
This is where the subtlety of negotiation is decisive. The seller’s arguments, like those of the administration, become subjective enough that only a professional can reconcile the selling price and the tax burden to your advantage.
Important: All property taxes are calculated on the so-called “objective” value which may differ from the purchase value.
Other costs of buying real estate
Any real estate investment incurs costs.
Typically, the real estate agency’s commission is about 2% of the purchase price. But it can vary a little upwards depending on the level of benefits and assistance.
The amount of notary fees is around 5%. It is strongly recommended to ask for details on the amounts concerned before entering into a contract with a particular notary.
It is strongly recommended that you hire a lawyer to support you in your project due to the complexity of property law in Greece. This service will cost you between 1.5% and 5% of the value of the property depending on the work required and the quantity of acts to be carried out. It will be important to set the limits before signing the contract with your lawyer.
To run your project easyer, you could use the services of https://mobilia-real-estate.com/ . These renowned professionals have a perfect understanding of the country’s rules in terms of taxes and other charges chargeable to buyers and have long experience with the best lawyers in Athens.
Taxes and duties for homeowners in Greece
Of course, the tax authorities will ask you regularly after the purchase, and the status of owner will commit you to the payment of annual taxes.
Greek real estate property tax
In Greece, the rate of tax on immovable property is progressive and is calculated from the objective value:
- 0% for objective value less than or equal to € 400,000
- 0.1% for an objective value ranging from € 400,001 to € 500,000
- 0.3% for an objective value between € 500,001 and € 600,000
- 0.6% for an objective value of € 600,001 to € 700,000
- 0.9% for an objective value of € 700,001 to € 800,000
- 1% for an objective value greater than € 800,000.
Property tax and housing tax
Created in 2014, the property tax is subject to complex calculation rules. Its rate varies between 0.1% and 1.15% of the value of the property.
In this field, administrative intricacies deserve a dialogue with the tax administration to defend your interests. It is often preferable to take advice from a Greek real estate agency to obtain the necessary details.
Taxes for foreign owners
When his country of origin has signed a tax treaty with the Greek authorities, the foreign owner is exempt from double taxation.
This is particularly the case for French investors. All real estate income generated by your property in Greece will only be taxable in the country where it is located.
However, the French subject to the IFI (tax on real estate wealth) are required to declare their Greek real estate assets to the French tax authorities.
For other foreign owners, it will be necessary to refer to their national law.
Taxes and levies for rental property investments in Greece
The return on rental investment is particularly attractive since it is around 4% to 6%. The tourist places (Crete, Athens, Mykonos, Santorini…) are those which offer the best opportunities.
Be aware that local authorities have introduced the non-resident income tax or IRPP. The amount will obviously depend on your annual income, knowing that there are rates by income level:
- 15% for income less than or equal to € 12,000
- 35% for income from € 12,001 to € 35,000
- 45% for income exceeding 35,000 €.
Note that the income generated by vacation rentals is not affected if the rental does not exceed 90 days per year (60 days per year if the property is located on an island of less than 10,000 inhabitants). Beyond these limits, the income received is subject to the IRPP.
Investing in Greek real estate offers you many advantages. However, you should be supported by a local agency who will be able to advise you judiciously in all stages of your project.
THE CASE OF PENSIONS AND TAX DOMICILIATIONS OF FOREIGNERS IN GREECE.
The press has regularly made its headlines about the new advantageous tax provisions offered to foreigners and retirees who elect their tax domicile in Greece.
Neither hell nor tax haven, Greece however offers some notable advantages for foreigners.
Article 5A of the tax law concerns natural persons, and not legal persons or incorporations.
- The taxpayer must not have been resident for tax purposes in Greece for 7 years during the 8 years preceding the official transfer of his tax residence to Greece.
- The taxpayer must demonstrate his real intention to invest on his own, or through an investment structure in which he is the majority.
- The amount of this investment must not be less than € 500,000 and made, at the latest, within three years of the request being subject to the tax regime.
- An exemption is granted to eligible persons who have already made such an investment on Greek territory.
- The annual tax is then fixed and set at € 100,000
- The special scheme can be extended to other family members on the condition of a flat-rate tax of € 20,000 per additional person.
- In the event that part of the tax has already been paid in the country of origin, the amounts are deducted from the compulsory flat-rate tax of 100,000 €. All sums must be paid in one go.
- In case of non-payment, all arrangements are canceled.
- All data is subject to an exchange of information with the country of the beneficiary of the special Greek regime.
Article 5b of the law provides that foreign pensioners establishing their tax domicile in Greece are eligible to the special regime.
The conditions are simple. In fact, applicants are asked not to have been a tax resident in Greece for 5 years during the six years preceding their transfer. Eligible persons must come from a country that has signed a tax cooperation agreement.
DID YOU SAY 7%?
The adventageous regime effectively offers a taxation of income from abroad at a level of 7% with an exemption from solidarity taxes. The beneficiary can also deduct the amount of income taxes that he paid abroad while he is eligible in Greece for the special regime.
The amount owed must be paid at once every year.
As a Greek resident, the beneficiary is also liable for tax on any income he receives from Greece.
It is clear that, despite the theoretical interest of this special tax offer, it will be necessary to make a precise simulation, case by case, to measure the real advantages of this reglementation.
Hopefully, after reading this information and recommendations, you will be armed enough to lead your real estate project and for some, your life project in this country so contrasting and attractive that Greece is.