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Thousands of Greeks sell properties to get rid of tax

10 August 2014 / 18:08:14  GRReporter
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The single property tax led to massive sales of property in all of Greece at prices lower than their nominal value.

Agricultural land, land in tourist areas and thousands of apartments in cities come on to the market, so that their owners do not pay tax.

This trend began after the imposition of the tax along with electricity bills, but recently it has increased repeatedly.

Tax may be reduced in relation to the previous similar one, but the total load for the owners who have a house with land or fields is much greater. Once the owners have received declarations, they have confirmation that they have to pay hundreds or thousands of Euros, as now each property is taxed.

According to the Federation of property owners, there are hundreds of requests from their members who even want to donate their property to the state in order to get rid of these huge taxes. The chairman of the Federation believes that the law on property tax is "crazy" and burdens the empty and unrented properties, and brutally punishes supposedly great real estate as it imposes a crushing tax extra. In fact, the property value is calculated based on the nominal value that has nothing to do with reality, as the result of which many seem to have assets of more than € 300,000, while they are not even worth half that.

The Federation say that "the additional tax burdens residential property owners, often two or three times the amount of the basic tax. Reforms should start with its repeal".

According to brokers, properties, which are added to the sum of € 250,000, and that have not been rented for years are as follows:

• thousands of empty apartments in Athens, Thessaloniki and other larger cities. These are mainly large apartments in blocks over 30-40 years old, for which no tenants can be found. Also stores and offices in the centre, that bring no earnings to their owners. Taxes imposed for these properties are great, especially if we take into account that they are not profitable. According to brokers of old estate, they are sold en masse at ridiculous prices. Apartments of 100 square meters in the centre of Athens are sold for 40,000-50,000 Euros only. These are typical ads:

  • apartment 59 sq.m. on Aristotle Street for sale for € 24,000 (407 ευρώ / τ.μ.);

  • apartment 43 sq.m. in a good block available for € 20,000;

  • house 52 sq.m. for sale for € 12,000;

  • apartment built in 2007, 37 sq.m., sold for ... € 30,000.

• houses that do not have electricity, but are subject to additional tax. These are mainly old houses, not for rent or sale nor used in any other way;

• agricultural land in the countryside, which is subject to tax, but not used to produce revenue. Clients of estate agencies are mainly inhabitants of the cities and have inherited fields which they offer for sale to get rid of tax.

• houses in the countryside that are uninhabited and whose owners live in cities also fall within the same category. An increase in sales by people living abroad has been noted.

• expensive properties are also being sold. Firstly, these are habitations with a large area of over 300 square meters, whose annual tax amounts to thousands of Euros. Also land in tourist areas or in areas with high nominal value that cannot be used by their owners.

Over-taxation of property is considered by brokerage agencies as the main reason for the collapse of the property market. Prices in the second quarter fell by 7%.

Research by the company Danos/ BNP Paribas shows that the dramatic decline in revenues and the deterioration of morale in clients has contributed to the drastic reduction in demand for housing.

Big opportunities for those with available cash

Properties have lost more than half their value over five years

Properties in Greece, mainly in Attica, have lost half their value for the years of the crisis 2009-2013. Experts recommend that those who have cash buy properties, mainly houses, because they are a good investment opportunity.

According to the Bank of Greece, the decline in prices from the beginning of the crisis has exceeded 40%, and the year 2013 was one of the worst years for the real estate market, when the decline was over 10%. However, according to brokers, in some areas the decline was 55% - 60%. These are mainly areas where there are thousands of unsold houses and entrepreneurs are forced to sell for as much as they can get.

Prices are expected to fall this year by another 5 to 15%. The main feature of realized sales is that more than half are priced below nominal value. These are mostly old apartments, shops and land in urban areas as well as buildings of less than € 5 million in expensive neighbourhoods. Depreciation of property has reached such levels that houses are sold at prices under € 5,000. In addition, 7 out of 10 properties are sold below their nominal value.

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