By Thomas Andronas | NeosKosmos.com
Members of the Greek diaspora who own property in Greece are set to be slugged with a new Greek property tax. The tax will constitute five per cent of the projected annual income of a rented property, based on a zoned location estimate of the property's value and its size. The new law came into effect for the 2010 financial year with the official deadline for submitting paperwork having passed on 31 May 2011, though there is still scope to lodge returns in order to avoid penalties.
Under law 3842/10 Article 16 foreign residents who own a house or apartment in Greece, either bought or inherited, that was not rented in 2010 will be taxed at a rate of five per cent as if the property had had income for the year. Greek tax accountant Panagiotis Vasilopoulos warned that the final tax obligation for foreign residents could total a significant sum, depending on the size and location of each property. He said property values would be determined by their location within zoned value bands, and the implied rental value of each property estimated on an incremental scale.
"The first 80 square metres will be valued at 51 euros per square, the next 40 squares at 85 euros per square, the next 80 metres at 136 per square, the next 100 metres at 255 euros per square, and above 301 square metres at 510 euros per square," he said. For example, a property of 100 square metres would have an approximate assumed annual income of 3400 euros for 2010, and will therefore be taxed 170 euros per annum. "We're talking about a very heavy tax burden for foreign residents given that these people are taxed from the first euro," Mr Vasilopoulos said.
Note that while Greeks living in Greece receive tax breaks - a tax-free threshold of 6000 euros for singles and 12000 euros for married couples - foreigners who earn income are taxed at a flat rate of five per cent from the first euro earned. Secondary properties will be taxed at a lower rate. "The first 80 square metres will be valued at 15 euros per square, half of the rate for the primary residence.
The next 40 to 120 squares at 25 euros per square, and from 120 to 300 squares at 40 euros per square," he said. But wait, there's more. As a result of an individual owning property in Greece, it will be assumed that he or she also visited Greece, regardless of whether they did or not. The tax office therefore would deem their cost of living to be 3000 euros if unmarried or 5000 euros if married and would apply a further 150 or 250 euros of tax respectively. But wait, there's even more.
If the property owner also owns a car, for example a 1200cc Opel Corsa, it will be assumed the car has a value of 3000 euros and will be taxed at a further 150 euros. Vehicles will also be taxed on an incremental scale dependent on engine size. So a married person could be slugged upwards of 570 euros in tax per annum under the new law, depending on how many properties they own, where the properties are, and how many cars they have sitting in the garage. However, there are some methods for minimising the tax paid.
If the property was locked up for all of 2010 and not used it can be declared empty and the owner can avoid the initial five per cent property tax. In order to support this claim the owner will need to provide an electricity or water bill that proves there was no usage. In order to avoid paying the car tax the owner must declare that they had surrendered the registration plates for all of 2010. If however, the owner failed to do this, they will be charged the car duty along with the cost of living in Greece tax, whether or not they visited Greece in 2010.
If the property was rented for 2010, the owner should declare the amount received and will be taxed normally. But if money received from rents is less than the estimated income as a living for car and home, then they must pay the difference. Indeed anyone that earns any income in Greece must submit an annual income tax return. Failure to do so will result in a fine. Australians who own property in Greece are urged to make contact with their lawyers in order to avoid potential penalties from failure to submit the appropriate documentation.
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GreekPropertyExchange.com (Greek Property Exchange - GPE) is the leading real estate and property website dedicated to the Greek and Cypriot real estate and property industry. GPE’s members include Greece and Cyprus’ top real estate agents, realtors, independent sellers, sale by owners, architects, developers, construction companies, lawyers and others that advertise residential (house, home, land, apartments, flats, villas, land, parcels and commercial listings for buying, selling, rental and vacation rental purposes for all of Greece and Cyprus. GPE is a real estate listing database portal that is advertised in the top Greek diaspora and international markets around the world (Australia, United States, Canada, United Kingdom, Germany, France, Spain and Europe) and targets interested investors - making it easier for foreigners to start their Greek property search (including Athens, Thessaloniki, Cyclades, Mykonos, Santorini, Rhodes, Crete, Halkidiki, Corfu, Kalamata and many more regions in Greece). GPE has been featured in many Greek media outlets (newspapers, magazines, websites, television and radio) including Athens News, Naftemporiki Newspaper, Kerdos Newspaper, Isotimia Newspaper, Vradyni Newspaper, Elefterotypia Newspaper, Elefteros Typos, Imerisia Newspaper, Ta Nea Newspaper, Ethnos Newspaper, GRReporter.com, Neos Kosmos Newspaper, India Today Magazine, El Mundo Newspaper, GreekReporter.com, DailyFrappe.com, Voria.gr, Parapolitika.gr, MetroGreece.gr, NewsBeast.gr, Radio Neo Show and on television with Antenna (ANT1) Satellite TV, MEGA TV, Makedonia TV and Channel 9 (Το Α και το Ω των ακινήτων) for its work to help strengthen the Greek real estate industry from around the world. Please visit GreekPropertyExchange.com for more information and to start searching, or creating your very own advertisement, for property listings in Greece. Twitter.com/GPE360 (@GPE360 - #HellenicHomeHunting), Facebook.com/GPE360. Watch our new real estate TV show on ANT1 (Antenna Satellite) called Hellenic Home Hunting.