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Tax on income from rents increases by up to 45%

04 November 2012 / 13:11:44  GRReporter
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At least 700,000 owners will have to dig deeper into their pockets after the expected changes in the taxation of income from rentals. It is expected that the tax rate of 10% to 45% will lead to an increased tax burden for those who are now "lucky" to receive rental income. Thus, rental incomes of up to 100,000 euro a year will be taxed by a factor of 10% to 30%, and those of over 100,000 euro per year - by 45% without a minimum not subject to taxation. Of the 1 million homeowners, who declare additional incomes, only 700,000 have rental income, but many of them cannot collect their rents because of delays in payment. According to the owners, one third of rents have now been outstanding for from one month to one year. The situation in the sector of real estate rentals, both homes and offices, will further deteriorate with the upcoming tax. In recent months, hundreds of owners have transferred their uncollected rents to the Deposits and Loans Fund or to the tax authorities. They are actually giving the rents away to the country to avoid being taxed for them. It is believed that this is the only way to avoid taxation because, according to tax laws, owners are obliged to pay taxes for the 12 months of the rental contract, whether the tenant has paid the rent or not. Thus the state has the right to request the respective amounts from the tenant - something, however, which almost never happens.

Recently, 25% of dwellings, 35% of stores and 65% of offices have not been rented for months. Before the crisis, real estate used to find tenants in a very short time. Today, it may take from 6 months to 1.5 years to let out properties, especially those with an area of over 120 square metres. And for offices the same period may reach up to 2 years.

According to recent data, nearly 50% of Greeks - tenants of any kind of property - are late with their payment by 2 to 6 months. While the delays are of more than 2 months in Athens, in Thessaloniki they reach 5 months. This is expected to lead to irreparable damages to lessors, since besides not receiving their income from the property, they are expected to pay excessive taxes for them. It is difficult to estimate the percentage of non-payers, because most owners have patience, hoping that tenants will pay later. It is believed, however, that unpaid rents amount to more than 1 billion euro and they are continuously increasing.

At the same time, courts have received thousands of requests from tenants to reduce their rent as well as from lessors for the eviction of non-payers from their properties. As regards the reduction of rents because of the high-demand, due to an agreement between the owner and the tenant, or because of a court order, there is a reduction of 15% to 50% for dwellings, 10% to 30% for shops and 20% to 50% for offices.

Tags: taxation real estate rentals
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