Why is the Greek real estate market expected to perform even better in 2020?
Greece's real estate market becomes even more attractive in 2020.
In the year that has been around for 24 hours since 2019, for the first time in many decades, the real estate market has a wide toolbox of motivation and investment attraction. For example, the suspension of 24% VAT on newly built properties, with a building permit from 1 January 2006, a measure that has long been sought by the market, has come into force since the beginning of the new year. Although, according to the Bank of Greece's annual report, a 24% VAT suspension may not make it possible to reheat construction activity, as well as other incentives coming into force this year, expectations for a dynamic return of the Greek real estate market is high.
The motives:
According to experts, expectations for a boost in demand from the new year are high, as a "cocktail" of incentives and more favorable taxation promises to raise capital in the real estate market. In detail:
- the three-year suspension of 24% VAT on real estate, licensed as of 1/1/2006. At nominal prices, as the contractors have already absorbed part of the burden, an apartment currently sold for 100,000 euros will be exempt from VAT corresponding to 24,000 euros and subject only to a transfer tax of 3,000 euros. The suspension of VAT will lead to the absorption of the large stock of at least 100,000 unsold apartments, at a time favorable to the real estate market. According to the Bank of Greece, prices in the third quarter of 2019 increased by 9% and 9.2% in the third quarter of 2019, respectively, for new - up to 5 years old - and for old apartments- over five years - respectively. In order to understand the impact of the VAT tax on the market, it is sufficient to state that in the five-year period 2003-2007 in Greece the share of housing investment as a percentage of GDP was one of the highest in the European Union and averaged. at 10%, according to Bank of Greece data. However, since 2007, the second year of VAT on new buildings, home investment has started to decline to reach 3.9% of GDP in 2011 and to fall to 0.6% of GDP in 2017.
- providing a 40% discount on the cost of energy, functional or aesthetic upgrades. The deduction will be based on the income tax of the natural person who owns the upgraded real estate, and can not be higher than 16,000 euros (per owner). However, since the tax exemption will only be given for the costs of obtaining services for the energy, functional and aesthetic upgrading of real estate and not for the cost of materials, with the transaction having to be made by bank, it remains to be seen whether this incentive will motivate investors.
- the granting of residence permits to third-country nationals for purchases of a minimum value of EUR 250,000. According to the latest data (1/12/2019) of Enterprise Greece, the total number of residence permits for real estate investor-buyers is formed from the program's entry into force in 2013 to 6,044, with China holding the scepter with 4,129 licenses followed by Turkey with 474. If members of the investor-buyer family are included, the total residence permits amount to 17,767.
- the status of non-dom tax resident, according to which foreign investors, who choose Greece as the place of tax residence, are taxed on their world income at a flat rate of EUR 100,000. In order to tax an investor with a minimum of EUR 100,000, either he or his relative is required to invest, at a minimum of EUR 500,000, in real estate or business or securities or shares or shares in legal entities or entities. entities based in Greece. This investment must have been completed within three years of the filing of the tax residence application, and the alternative taxation scheme cannot be made for more than 15 years. It is also possible for a natural person to join the favorable tax regime and his relative, paying in this case an amount of EUR 20,000 (for each person). The common denominator of the terms, which are set, is a prospective investor not being a tax resident of Greece for the previous 7 of the 8 years prior to the transfer of tax residence, with no minimum stay required in Greece. This measure is expected to significantly boost the market for expensive housing and possibly, depending on the level of investment, luxury and luxury properties. The main beneficiaries of this measure are "High Net-Worth Individuals" or HNWI individuals who are taxed in their country of residence for their global income and are seeking a more favorable tax framework.
-the abolition of the 0.75% tax rate imposed by the SYRIZA government on the assets of the public real estate investment companies (AEDAP) in 2016, when the tax framework was then modified.