Property tax valuation hike will increase other taxes, cut benefits
The increase of property values for tax purposes in 60 percent of the property zones nationwide will bring a domino effect, not just in terms of increasing the ENFIA real estate tax, but it will also affect tax-free levels for real estate transactions, and will limit the number of recipients of social benefits.
Over 20 taxes and tariffs related to real estate, and 10 social benefits, which have a maximum value of real estate ownership as a qualification criterion, will be negatively affected by the impending hikes in property tax valuations.
The increase of property values for tax purposes in 60 percent of the property zones nationwide will bring a domino effect, not just in terms of increasing the ENFIA real estate tax, but it will also affect tax-free levels for real estate transactions, and will limit the number of recipients of social benefits that are available to those whose property holdings do not exceed a set value.
Sources have told To Vima that, for the time being, the government will only change the tax valuation of properties per square metre in all property zones nationwide.
Other factors that affect property values will not change for the time being. These include the property’s level of commercial value, on what floor an apartment is located, and other factors that determine the final tax valuation per square metre. Taxes on parents’ gifts of property to their children and on inheritances, as well as the tax free ceiling for one’s primary residence will not be adjusted, for now.
For a parent transferring to their child their first residence, the tax-free limit is 200,000 euros. After that, the gauges regarding inheritances, gifts of property, and transfers of real estate to children will be implemented.
If the tax valuation increase in particular zones ranges from 40-60 percent, it is almost certain that for an average-sized home of 100 square metres there will be absolutely no tax-free amount, for any type of transfer.
The valuation hikes will raise: the minimum presumed income for those renting out an apartment (which is three percent of the tax value), the municipal tax on real estate, the VAT tax on apartments in newly constructed buildings, and even fines for building code violations and illegal constructions, which are all based on the property’s tax bureau valuation.
Social welfare benefits affected
The welfare benefits of various social groups, which are contingent on the value of the real estate one owns, will be cut due to the increase in the tax value of a property. For example, the state heating subsidy is paid only to those whose property is valued up to 100,000 euros for a single taxpayer, and 200,000 for married taxpayers, regardless of the number of children. The increase in tax valuations will leave thousands of beneficiaries out in the cold.
A similar situation will apply to reduced Public Power Corporation electricity pricing (“social household pricing”) for vulnerable groups, and to the Social Solidarity Income received by the poorest taxpayers.