February 8, 2023

Athens News

News in English from Greece

Real estate for the budget – the goose that lays the golden eggs

Despite rhetoric about the country’s manufacturing transformation and its rapid transition to the digital age, accelerated by the pandemic, the Greek economy remains largely land-based.

Ownership of land, constant changes in its use, transmission from generation to generation, devaluation and revaluation of its commercial value are still the basis of economic activity, the core of the economic and fiscal policy of every government. And this is not necessarily a sign of a healthy economy. On the contrary, it may be a sign of a sick economy.

The government in the pre-pandemic period made it their banner to free real estate from the heavy burden of taxes. And in part, it fulfilled this promise, but only in relation to very big fortunes, because it allowed transferring tax-free property to heirs. In some other country, this law would raise questions from the prosecutor’s office, but we understand for whom it was made, so if the law enforcement system has any questions, they immediately disappear.

For the vast majority of property owners, those who during the memorandum years caused allergies in lenders with their high rates of home ownership or rural properties, often with zero value, the rule remains: small and numerous real estate is the goose that lays the golden eggs for the state budget.

Only from ENFIA this year the state will receive almost 3 billion euros. And the additional income that the government expects to receive from the introduction of new increased property prices, exceeds 500 million euros.

And ENFIA is just one of almost 20 taxes and fees, directly or indirectly related to the use or transfer of real estate, which, as a rule, track objective prices. Now commercial as well, as the gap that used to separate them tends to disappear.

According to government plans, during the year the tax “milking” of real estate, regardless of size and social significance, will be expanded and made permanent in an irreversible way: with the introduction of a permanent automatic price adjustment mechanism by the tax service, which will monitor and adjust to the ups and downs of the “casino” real estate market.

This comes with two risks. First, the state can become an accomplice in a speculative real estate bubble. And secondly, the exorbitant cost of acquiring a home can create a generation that is deprived of the right to housing for life. And third, the owners of small real estate will be forced to sell it to larger or more successful owners, thus redistributing the structure of the real estate market in the country.

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