Real Estate Transfer Tax News

On Friday 25th February amendments to the Law on real estate transfer tax have entered into force. These amendments mostly concern persons who have for the first time bought, or are planning to buy a property for their own housing, on which basis these persons are exempt from paying taxes in the amount of 5% of the property value. The size of apartments for which tax is not paid remains the same.

The news is a regulation - designed to 'revive' the quiet property market – stating that the tax will not be charged in case the real estate is sold or rented within three years from purchase. Until now this 5% tax was collected from the owners retrospectively in case they sold the property within five years from purchase.

This means that young families wishing to buy a second property will be exempt from paying the tax on the first one, if three years have passed – instead of having to wait for five years. If a family decides to purchase a larger apartment following the latest Government model, by which the State pays half of the mortgage for the first four years, they need not pay the tax for the first apartment if the three years deadline has expired, however they will have to pay the tax for the second, larger apartment, as well as for the first one in case the three years have not passed.

A new regulation is also the one stating that if the buyer, or his/her spouse changes his/her residence for the first three years from tax payment exemption. This practically means that the buyer will have to pay the tax retrospectively if he/she or his/her spouse changed their address in the three years above mentioned, for the purpose of obtaining some other benefits – for example, right to a parking ticket, a better kindergarten, school for their child etc.