Crisis: Greece; property investment no longer a safe bet

Real estate taxes rising steadily, better to rent

31 January, 16:02

(ANSAmed) - ATHENS, JANUARY 31 - Before the economic crisis brought Greece to its knees, investing in real estate was always seen as the safest bet. Now, instead, the situation has been turned on its head and buying property has become unprofitable. According to several local economic analysts, the first reason concerns the government's chronic inability to fight tax evasion. As many of them point out, over the past few years every failed attempt by the government to crack down on tax evaders invariably led to an increase in real estate taxes. The figures speak volumes: in 2012 Greeks paid 2.75 billion euros in real estate taxes, compared with the 526 million paid in 2009, while in 2013 the government hopes to be able to bring in 3.2 billion to state coffers: six times what taxpayers paid in 2010.

The National Property Owners Confederation (POMIDA) has said that there are 40 different taxes on real estate in Greece.

Meanwhile, from the 2,059 Greek citizens with secret accounts in Switzerland (most likely undeclared on tax returns) on the 'Lagarde list', the internal revenue service has not been able to recover a single euro. ''Since 2009,'' chairman Stratos Paradias said at the 30th national POMIDA conference, ''several economic and other measures have been brought in which are destructive and against the interests of property owners and which led to a collapse of the real estate market and the impoverishment of owners, who have seen all profits slip away during the economic crisis - while at the same time finding themselves unable to pay the steadily rising taxes.'' A typical example of the dramatic situation the sector finds itself in is the fact that many owners would like to get rid of the burden of taxes that being a property owner entails in by selling their real estate.

According to a survey conducted by the Kappa Research institute on a sample of 1,414 people throughout Greece, 54% of Greeks will this year not be able to pay real estate taxes and will have to choose between three possibilities: selling one of their properties to pay the taxes on the others, request a bank loan, or let the State seize the property. The same percentage (54%) of Greek real estate owners said that they no longer earned any profit from their properties but still had to continue paying taxes. One in four Greeks (25%) have fallen behind on loan payments, while 48% say they are certain that they will soon no longer be able to pay off their bank loans. The survey also noted that the vast majority of Greeks (82.7%) believe that it is no longer worth it to own real estate, or that it is counterproductive, while over half of those surveyed said that it is better to rent a home than own it.

In a meeting with Finance Undersecretary Giorgos Mavragannis, the high-ranking members of POMIDA warned that the State may not be able to bring into its coffers the latest property taxes.

''If the government continues its unreasonable policy of taxing real estate of all kinds, it will end up in an economic disaster, wiping out entirely all those property owners unable to pay the new taxes,'' POMIDA chief Paradias said at the end of the meeting. (ANSAmed).

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