Greece: New Tax for Foreign Homeowners

British and other European holiday homeowners in Greece start the new year with the prospect of extra taxes and fines on their properties.  The Greek government is intending to impose up to a 20% tax, depending on the area, on any extensions to original properties.

The taxes, which could amount to thousands of pounds for some British owners, will affect properties in the most popular ‘second home’ locations such as Rhodes, Crete, Santorini and Mykonos, to name a few. Owners will have to come up with the extra cash within an 18 month period.

Currently, home owners pay property taxes based on the size of the internal rooms; so many lateral-thinking builders have got round the regulations by building external extensions, such as wide verandahs, and then filling them in to make enclosed rooms once the property has been inspected by the building regulators.  A foreigner comes along and buys the property, unaware of the original planning and tax liability.  The law is supposedly designed to be a shot across the bows of cowboy building contractors, whereas in reality it is a way for the strapped for cash Greek government to raise some euros.

As an example, the owners of a modest two bedroom apartment, with an additional room not originally declared, would be landed with something in the region of a £600 bill to pay; for a luxury villa, the taxes could be in the thousands of pounds.

Whatever the amounts it is a blow to an already shaky property market, which depends for its survival on the expat factor.

It is estimated that there are some 1.2 million Britons who have second homes abroad, and Crete and Corfu are particularly popular.  There are also large numbers of Germans with holiday homes in Greece and they too will fall foul of the new law.