This is another world original of Greece and one of the clearest examples of the absurdity of the tax system, a result of the State’s approach to the “good” of real estate, which has evolved into a means of meeting fiscal needs through its overtaxation and not in a development tool. The result is that the construction sector now contributes less than 1% to GDP (residential investment has fallen to 0.6% from 11% in 2007).
- Oldness factors. A typical example is the age coefficients, which are diametrically opposed to those applied to ENFIA compared to the corresponding objective values. real estate there is a tax increase of up to 25%. And this despite the fact that the zone price taken into account already concerns a newly built building. Thus, for example, a three-year-old newly built apartment with a zone price of 250,000 euros will be taxed with ENFIA calculated for 312,500 euros, with a “youth” factor ratio of 1.25 imposed on properties aged 0-4 years.
On the other hand, if the exact same house is to be transferred, its objective value, on which the transfer tax will be calculated, will be 225,000 euros, as an age factor of 0.90 is applied!
It is obvious that here we have over-taxation of the properties of the whole country through an “inverted” coefficient of antiquity, according to which old properties are taxed as new, while already newly built properties are taxed even more. As stated by Mr. Babis Charalambopoulos, for many years president of the Board of Sworn Appraisers and former president of the Hellenic Appraisal Institute, “while real estate taxation, whether it be a transfer or the ENFIA, should be imposed on the same taxable value (so that there is tax justice) we have distortion and imposition of taxes on fictitious values”.
According to him, most countries establish systems of taxable values for real estate, but their prices are sought to be as close as possible to commercial ( market) values and certainly be the same, be it transfers or possession taxes such as ENFIA. “If the state wants to impose a high ENFIA (due to the country’s obligations to creditors), it should put in place the aging factors that apply to the calculation of the objective value,” he notes. In this way, there would be a reduction in the value (and therefore the tax) of the older properties. The exhaustion of the factor of age of the objective values at 26 years, beyond which the value of the real estate does not depreciate further, is considered problematic. That is, whether the property is 60 years old or 25 years old, the taxable value is the same.
- Commerciality factors. The same problem is also found with the absence of a commerciality coefficient from ENFIA (in relation to objective values where such a coefficient exists), for which all properties, regardless of where they are located, have essentially the same commerciality. The result is again significant inequities, as a commercial property will pay the same occupancy tax as an office on a floor in the same building. For example, a store of 100 sq.m. built in 1990 on Ermou Street in Athens (where the commerciality is very high, i.e. 4.6) in the case of ENFIA is taxed approximately 930 euros, i.e. by 1% less compared to an office of 100 sq.m. on the third floor of the same building (939 euros). But when it comes to transfer, the taxable value of the shop is many times that of the office on the third floor. If the commerciality factor had been applied, then the ENFIA of the store would have been around 4,250 euros, clearly fairer than today.
- Floor factors. Even the floor coefficients are different, as the higher the floor, the more the coefficient rises, when it comes to determining the objective value, compared to ENFIA. That is, while the first floor apartments have the same floor coefficient (1.00), in the rest of the properties there is a difference. A third-floor apartment has a rate of 1.01 for ENFIA, but 1.1 for transfer tax. So it’s clear that without a radical overhaul of the way the country’s property values are calculated for tax purposes, the system will remain unfair, crooked and largely illogical. As noted by real estate market executives, the whole issue of taxable values needs to be completely revised (zoning, commerciality review, change of age factors, equalization of floor factors, etc.) with a view to approaching commercial values and taxation either for transfer or for ENFIA based on the same taxable values for each property. And the data should be updated on an annual basis, so as to reflect the real situation in the market.
Read the article as published on the website of “Kathimerini”
http ://www.kathimerini.gr/972582/article/oikonomia/ellhnikh-oikonomia/paralogismos-me-th-forologhsh-akinhtwn
