Buying a new build property in Greece can bring an additional cost of 3.2 per cent of the property’s original vale, according to services company Savills.
The additional taxes mark Greece out as the most expensive European destination for overseas property investors buying new build property in Southeast Europe. This goes some way towards explaining the issues Greece faces attracting foreign buyers, namely in the countryside home market.
One of the key reasons for the high additional costs for buyers is the 24 per cent value-added tax on purchases of properties whose building permits were issued after January 2006. This is particularly problematic for overseas property investors, as the tax mainly concerns holiday homes. Buyers do not have to pay VAT if the property’s aim is to be their main residence.
However, older properties only face the transfer tax, which has now dropped to 3 per cent from the original 10 per cent levied up until 2013.
This means that overseas property investors who choose to buy homes in popular holiday destinations generally opt for a used property rather than new build, due to the lesser cost of the completion of the transfer.
This will generally not exceed 8.2 per cent, a fairly competitive rate for a Mediterranean country. In Cyprus the tax burden applied to new homes is 6.2 percent and on older ones 4.9 percent. In Portugal there is no distinction between older and new homes, with a flat charge of 8 percent imposed on transactions.
Head of the international development department at Savills, Alexandros Moulas,, said: ‘This hampers sales of tourism properties that have been or will be built within tourist resort developments as those assets are de facto aimed at the foreign market. The state has to move hand-in-hand with the investor (i.e. the tourism accommodation development groups), offering incentives – financial or town planning – as the rest of the countries in the Mediterranean do.’