Real Estate: VAT suspension on newly built homes set to be extended

Two tax measures considered crucial for sustaining growth in Greece’s real estate market and boosting construction activity are expected to be extended through 2027. These include the continued suspension of the 24% VAT on sales of newly built properties and the suspension of the 15% capital gains tax on property transfers, with reports suggesting that the latter could even be permanently abolished.

The final decisions are expected to be announced in the coming weeks as part of the tax package Prime Minister Kyriakos Mitsotakis is set to unveil at the Thessaloniki International Fair (TIF). The government’s objective is to keep the housing market active, support the construction industry, and prevent additional costs for buyers and sellers at a time when property prices continue to climb, making homeownership increasingly difficult for many households.

VAT suspension seen as key for new homes

Market participants consider the extension of the VAT suspension on newly built homes particularly important, as it significantly lowers purchase costs and helps sustain investor interest in new developments.

Under the current regime, buyers of newly built properties pay only a 3% property transfer tax based on the property’s taxable value. The difference is substantial. For example, on a newly built apartment worth €200,000, a 24% VAT would add €48,000, increasing the final price to €248,000. Under the current exemption, the buyer pays only €6,000 in transfer tax, bringing the total cost to €206,000.

VAT on newly built properties was first introduced in 2006 at a rate of 19%, while first homes were exempt. During Greece’s fiscal crisis, the rate was raised to 24% and remained in force for 13 years. In 2019, the government introduced a three-year suspension of the tax, effective from January 1, 2020, through the end of 2022. The measure has since been extended several times, with the current suspension due to expire on December 31, 2026.

The exemption applies to building permits issued from 2006 onwards, covering both developer-owned projects and properties built under Greece’s antiparochi (land-for-apartments) system. Developers must submit an application to the Independent Authority for Public Revenue (AADE), and the exemption applies to all unsold properties associated with the relevant building permits.

Capital gains tax may be abolished

At the same time, the government is also considering extending the suspension of the 15% capital gains tax on property transfers, with some reports indicating that a permanent abolition of the tax is also under discussion.

The tax applies to the profit earned from selling a property—that is, the difference between its purchase and sale price. Although the measure was legislated, it has never actually been enforced because its implementation has been repeatedly suspended.

For example, if a property purchased for €120,000 is later sold for €180,000, the €60,000 gain would be subject to a 15% tax, resulting in a tax liability of €9,000.