When purchasing real estate, taxes and fees are imposed on both the seller and the buyer, with each country having different taxation policies.
The value of a real estate transaction in Greece for tax purposes is not necessarily the transaction value stated in the sale agreement. Each transaction is reviewed by the local tax office (Objective Value), which may determine that the transaction value does not reflect the market value and could set a higher transaction value. This valuation does not affect the agreement between the parties but influences the amount of taxes the parties must pay.
If the local tax office determines that the property value is lower than the transaction amount, the taxes will be based on the amount specified in the sale agreement. If the local tax office determines that the property value is higher than the transaction amount, the taxes will be based on the value set by the office.
The fees imposed on the parties to the transaction will be determined solely based on the transaction amount stated in the agreement between the parties.
Taxes and Fees for Purchasing Property in Athens
The taxes and fees imposed on real estate transactions are as follows:
Purchase Tax: The purchase tax is 3.09% of the transaction amount or the transaction value determined by the local tax office, whichever is higher. The purchase tax in Greece is fixed and is not calculated in tax brackets as it is in some other countries. Additionally, the purchase tax does not change based on the number of properties purchased, meaning the tax rate remains the same regardless of the number of properties the buyer purchases, provided they do not exceed three transactions within two years. Transactions considered in this two-year period include both real estate and vehicle purchases and sales.
Lawyer: It is recommended to conduct a real estate purchase transaction with the assistance of a local Greek lawyer to ensure compliance with local laws and the protection of the parties' rights. The customary fee charged by local lawyers is 2% of the transaction value, with a minimum fee of €1,000 per transaction.
Notary: In Greece, a notarial agreement is mandatory when conducting a real estate transaction. The notary in Greece is considered equivalent to a local judge and has broader powers than a lawyer. A notary's signature on a real estate transaction ensures that the agreement will be enforced. If the seller fails to meet the requirements, the buyer can assume the seller’s obligations and complete the transaction. If the buyer fails to meet the requirements, the notary has the authority to forfeit the deposit paid on the property. The notary's fee is generally 2% of the transaction amount.
Engineer: Involvement of an engineer in a real estate transaction is crucial. Every house in Athens has a "Building ID," which is essentially the blueprint and location of the house. When conducting a real estate transaction, there must be complete consistency between the Building ID and the physical house. Additionally, if any changes have been made to the house over the years, legalization of these changes must be ensured with a permit from the authorities before completing the sale. These changes include any modifications made within the house. Some changes require approval from specific consultants. For example, moving a sink requires approval from a plumbing consultant. More significant changes, such as adding a floor or strengthening the structure, require permits from a structural engineer, who is more advanced than a regular engineer.
Example of the Importance of Engineer Involvement:
Lar Homes wanted to purchase an apartment on the third floor of a building in Athens. After checking the Building ID, it was discovered that the entire building was not correctly positioned and encroached 40 cm into the neighboring plot. It was found that legalization of the apartment was not possible, which could affect future sales.
Land Registry Registration:
After completing the real estate transaction, it is mandatory to register it with the Greek land registry. The cost of registration is approximately 1.5% of the transaction amount.
Brokerage Services: If the transaction was conducted through a broker, the brokerage fee is between 2% and 3% of the property value.
Capital Gains Tax:
The Greek authorities do not charge tax on capital gains from privately owned real estate. This exemption encourages foreign investments in the country as part of coping with the Greek debt crisis. The exemption applies to holding up to three real estate properties. Holding more than three properties is considered a commercial activity.
Purchasing Property in Athens – Professional Handling Ensures Success
Like any real estate transaction, purchasing property in Athens is complex. However, ensuring professional support from local experts in various fields guarantees that the transaction is conducted correctly and professionally, protecting the rights and money of the parties involved. The experts at Lar Homes will ensure all aspects of the transaction are checked and executed in the best possible manner, based on their knowledge of the local market and understanding of investors' needs.
Our team of experts will be happy to assist you throughout the process, making it much simpler.
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