Scenarios for changing the taxation of income from rental housing

The most likely government intervention is to add an intermediate rate to the €12,000 and €35,000 scales to favor middle and high incomes.

The government’s economic advisers are looking for new solutions before the elections to persuade the population to vote for the “New Democracy”. Greek media are reporting that the government’s financial advisers are developing a new support package to ease the taxation of rental income. It is noted that this intervention, if it takes place, will be New Democracy’s election statement for the next four years.

As a reminder, rental income is currently taxed as follows:

• for income up to 12,000 euros at a rate of 15%,
• for incomes from 12,001 to 35,000 euros at a tax rate of 35%,
• for incomes over EUR 35,001 the rate is 45%.

The most likely scenario is the introduction of yet another intermediate tax rate. Based on this, two intermediate tax rates will be set, between 12,000 euros and 35,000 euros, since economic consultants believe that the tax rate for incomes up to 12,000 euros is not high (alas, inflation has eaten). The goal is to bring down rent prices that are out of control by incentivizing landlords with taxes.

It is worth noting that POMIDA (property owners union) has been petitioning the government for a long time to lower property tax rates. In particular, they proposed to the Ministry of Finance to reduce the rate of tax on rental income exclusively on the tax rate on rental income on main residential premises (tax codes 103 and 104 on rental income on real estate) by 10 percentage points in each applicable tax group, as follows:

• for renting the main housing with a value of up to 12,000 euros – reduce from 15% to 5%,
• reduce from 35% to 25% for persons with an income of 12,001 to 35,000 euros,
• reduce from 45% to 35% for rental income of 35,001 euros and above.

According to POMIDA, this measure will solve the problem of the supply of vacant homes for primary residence, making them more competitive than the offer for short-term rentals. Thus, landlords will rush to offer all vacant housing exclusively to tenants of the main houses as preferred tenants and renew existing leases of the main houses.

At the same time, the authorities have serious doubts about whether this decision will lead to lower rental prices, or whether some landlords will follow the traditional path, writing down one price in the contract, but actually receiving noticeably higher payments.

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