KTG officially declares 2013 as the “Greek Year of Property Taxes”!

If comes as expected: nothing is more permanent than the temporary. The so-called ‘emergency property tax’ originally planned for two years is going to be permanent. It will be embedded in the new unified property tax currently worked out by the Greek finance ministry. The necessity of adding together one or two regular (FAP, TAP) property taxes and the emergency property tax became imminent for the finance ministry as the Supreme Court had ruled last year that this ‘emergency property tax’ cannot be imposed for more than two years.

The new unified property tax will go in effect in summer 2013. The new property tax system is expected to be submitted to parliament this or next week. Final decisions are expected to be taken tomorrow Tuesday. The finance ministry expects to raise 3 billion euro from property taxes and thus on an annual basis. Therefore, some media consider as more likely that the tax rates will be increased in the second year of the tax application.

So far the three coalition government partners seems to have reached a consensus on lowering the tax-free threshold down to 50,000 euro (from 200,000 euro now) of property value. The tax-free threshold will be applied to all properties owned by one owner.

“The tax rates will range between 0.1 percent and 2 percent.

The tax, which will apply from the second half of this year, will also have a rate of more than 2 percent only for properties whose value exceeds 10 million euros, according to the outcome of the meeting held on Friday under Deputy Minister Giorgos Mavraganis.

The precise amount of the tax-free threshold and the number of brackets – likely to range between six and eight – will be decided next week. This follows strong pressure by New Democracy deputies on Finance Minister Yannis Stournaras over the past couple of days, with the argument that any further burden on property owners’ shoulders would create more problems than it would solve.

In the case that a threshold of 50,000 euros per owner (not per property) is introduced, some 1 million taxpayers will find themselves exempt from the tax, while most property owners, especially those whose assets are of low objective value, will see their tax dues decline significantly. For a married couple, the threshold would rise to a total of 100,000 euros.” (ekathimerini)

Until the new tax goes into effect (second half of 2013), property owners in Greece will have to pay three regular property taxes from past years (FAP 2010, 2011 and 2012) plus the rest installments of  emergency property tax.

Notices from the tax office started arriving as of end of January. The taxes are nicely and carefully distributed in installments to be paid within the next 10 months. The result?

An average owner of a home or apartment will have to pay an amount of roughly calculated at least 250-300 euro in the average each month until the end of the 2013 – like a rental for his own home, so to say.

According to a recent survey conducted by Kapa Research for the Greek Federation of Property Owners,

54% declared they won’t be able to pay all these taxes, while

32% declare they would maybe be in position to pay these taxes, even thought they were not sure about it.

Those unable to pay the property taxes would most likely seek to sell their property, even below its commercial value, or borrow money, or even let the state ‘seize’ them.

Those impoverished property owners apparently will leave it up to FinMin Stournaras to sell the seized homes and personally fill up  the holes in his perforated revenue target balance sheets.

We cannot resist the temptation and declare  2013 as “The Greek Year of  Property Taxes”!

PS CRAAACK! My knees gave in under the heavy property tax burden…