Part One: Buying a property
Introduction
Are you dreaming of owning your piece of paradise in Greece? Whether as an investor or for residential purposes, you have access to a captivating real estate market that offers not only picturesque landscapes and idyllic beaches but also promising investment opportunities. In this article, we provide a comprehensive overview of the steps required to become a property owner in Greece. Additionally, we offer insights on how you can realize your dream of living in Greece as a proud property owner.
Initial Agreement
The first step is, of course, to find the right property. Once the buyer identifies a desirable property, a reservation deposit is usually required to secure it. This amount is negotiable and typically ranges from 1-5% of the property value.
Legal Due Diligence
As a next step, the interested buyer should appoint a lawyer to conduct a title search to verify ownership and clarify whether there are any liens or encumbrances registered over the property. This title deed research is conducted at both the competent Land Registry and the Cadastral Data Basis. If any errors are found during this research, an extrajudicial application for correction may be submitted to the competent Cadastral Office. Such errors may involve property details, such as a typo in the listed square meters, or the owner's details, such as their TIN or father's name. These obstacles are common, making a lawyer's involvement essential for conducting the necessary due diligence and title deed research over the property.
Documents Collection
To finalize the property purchase, legalization documents and an engineer's documents are required. The engineer's input is particularly valuable during this process. The engineer undertakes the technical survey of the property, issues topographical diagrams, ensures the urban planning compliance of the property, and its regularization if it is an unauthorized construction, based on the current urban planning legislation, to mention a few of their tasks.
Final Agreement
Once legal and technical due diligence is satisfactorily completed and all documents have been collected, the final agreement is to be signed before a notary public, and the remaining balance as to the property must be paid at this point. In Greece, real estate agreements must be drawn up before a notary. The process involves the notary providing the parties with a rough draft of the contract. Once the parties agree to the terms, the notary issues the final contract and sets the execution date. The parties (e.g., seller and buyer) must be present at the notary's office to read and sign the contract. Signing the contract establishes the title, but to complete the publicity formalities and transfer the ownership, it must be legally registered at the competent Cadastral Office.
Title Deed Issuance
The notary is entrusted to handle the transfer of ownership so that the buyer will receive the title deed. For the transaction to be completed, the deed must be registered as transferred with the registries of the competent Cadastral Office.
Procedure Details
Next Steps
Each party will receive certified copies of the deed. Any party may expedite the transcription of the title deed to the cadastral sheets. Once the contract is published in the Cadastral Data Base and the details of the new beneficiary are registered, the transaction is complete.
Timeline
The entire process up to the contract execution would depend on various factors. The issuance of the title deed after final approval of the draft contract varies, depending on specific circumstances and procedures. The time required depends on the documents issued by the engineer and the legal procedures to be completed. However, it might take a few weeks to a few months.
Taxes and Fees:
Property Transfer Tax: Transfer tax is levied on every purchase and sale of real estate or a negotiable right to real estate located in Greece, and the buyer is liable to pay it. The tax rate is 3% of the taxable value of the property. For newly constructed properties with building permits issued after January 1, 2006, and purchased directly from the developer, the VAT of 24% is applied instead of the property transfer tax.
Capital gains tax: Capital gains refer to the amount by which the current selling price of a property exceeds the purchase price at which the seller acquired it. Under the new Law 5000/2022, the payment of the capital gains tax of 15% on this margin between the selling price and the purchase price of the transferred property is postponed for two years until December 31, 2024.
VAT: For newly constructed properties, VAT is 24%. However, the option to suspend VAT for newly constructed buildings was extended for another two years until December 31, 2024, by Law 5000/2022. As a result, buyers are exempt from this tax.
Notary Fees: Generally, around 1-1.5% of the purchase price. In general, however, it varies as follows: For property values up to € 120.000, the notary's fee starts at 0.80%. For a property value between € 120.000 and € 380.000, the notary's fee is set at 0.7%.
Legal Fees: They vary from property to property and are subject to the private agreement to be reached.
Registration Fee: Around 0.5% of the purchase price.
Real estate agency (if applicable): The brokerage fee is a matter of negotiation between the buyer and the broker. It is usually 2% of the value of the property.
Taxes and Fees after becoming the new owner of the property:
Property Ownership Tax: Since 2014, property owners have been required to pay a Unified Property Ownership Tax (ENFIA). This tax applies regardless of whether the property is used for personal use or rented out. The amount is calculated based on the value of the property as of January 1st of each year and also depends on the area and age of the property. If the property has a total value of more than 200,000 EUR, the amount exceeding this value is additionally taxed.
Income from rental and leasing: Income from rental and leasing is subject to a progressive income tax rate if the owner is not a company. The tax rate for an individual is 15% for income up to 12,000 EUR. For income between 12,001 and 35,000 EUR, the tax rate is 35%. Any rental income exceeding this amount is taxed at a rate of 45%.
Conclusion
Of course, each property has its own peculiarities and may be subject to different legal and urban planning regulations. For example, if it is an apartment, the law on the creation of a horizontal property will have to be taken into account and therefore the case may need to be dealt with differently. In any case, this is the general direction.
Moving to Greece presents numerous opportunities, from its stunning landscapes to its attractive investment potential. Completing the real estate purchase is a crucial first step towards turning your dream of residing in Greece into reality. Whether your goal is to invest, retire, or simply savor the Mediterranean lifestyle, working with a legal professional will ensure a seamless process. In the following section, we will delve into the requirements and procedures for obtaining a residence permit, guiding you through the next (possible) steps to establish your new life in Greece.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.