The government is reviewing the provision for a three-year income tax exemption for vacant properties and those withdrawn from short-term rentals. Concerns have been raised during the public consultation phase that the current requirements are too stringent and may reduce the measure’s effectiveness.
Current Provision and Proposed Changes:
- Under the existing regulation, to qualify for the tax exemption, a property must remain unoccupied for three consecutive tax years: 2022, 2023, and 2024.
- This means the property must not be declared as the owner’s primary or secondary residence, used for self-occupation, or rented out, including through short-term leasing platforms like Airbnb.
The government is now considering reducing this three-year requirement to two years or even one year. This adjustment aims to facilitate the participation of more property owners in the scheme, encouraging them to put their properties on the rental market, benefiting from the tax relief, and thereby increasing housing availability, particularly in large cities where demand is high.
Incentives for Transitioning to Long-Term Leases:
- For property owners who wish to transition from short-term to long-term leases, the relaxation of the three-year requirement is also being considered.
- If an owner has offered their property for short-term rentals for one or two years and wants to switch to long-term leasing, they could still qualify for the three-year income tax exemption.
This proposed change aims to motivate owners currently engaged in short-term rentals to shift towards long-term leasing, thus providing more stability in the rental market.
Expert Opinions:
- According to Mr. Paradias, president of the Hellenic Property Federation (POMIDA), the measure could bring more properties to the market if implemented correctly. He emphasized the importance of avoiding unnecessary restrictions, as they would limit the number of available homes, particularly for young renters.
- He argued that the three-year vacancy requirement is excessive, especially when the City of Athens recently introduced a renovation subsidy of €10,000 for properties that have been vacant for only six months.
- Additionally, he pointed out the impracticality of the three-year requirement for short-term rental properties. For example, it would exclude all those who entered the short-term rental market in 2023 and 2024, as they would need to wait three years before transitioning to long-term leases.
Tax Legislation Details: The new tax bill, currently under public consultation, outlines the main conditions for granting the exemption. Specifically, it includes:
- Eligible Properties:
- Residential properties up to 120 square meters.
- Long-term rental agreements must be signed between September 8, 2024, and December 31, 2025, for at least three years.
- The properties must have been declared as vacant for the tax years 2022, 2023, and 2024 (if the lease is initiated in 2025).
- They must not have been reported as rented, primary, or secondary residences of the owners, nor used for self-occupation or free provision (as per tax forms E1 and E2).
- If previously used for short-term rentals, the agreements must have been reported to the Tax Administration.
This initiative aims to increase the availability of long-term rental housing by providing tax incentives to property owners, thus addressing the high demand for rental properties in major urban areas.
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