The government plans to collect up to 280 million euros per year from property tax alone, three times more than what was collected through 2025 from the real estate tax, of 85 million euros. This will be achieved through the new property tax reform, which is expected to bring a number of innovations, from taxation on market value and no longer on references to an increase in the tax to be paid.
Through the draft law submitted for Public Consultation ‘On the Immovable Property Tax’, it is intended that the taxation of housing will be based on market prices, and not on references, as municipalities will issue new property values every year. The more expensive the property, the higher the tax that will be paid.
“The values used for real estate taxation are not updated according to a regular cycle and do not reflect market values, leading to a loss of revenue,” the report states, so it is envisaged that municipalities will annually determine the new values of real estate on which the tax will be applied.
A tax of 0.1% to 0.2% of the property value will be levied on the prices of apartments that will be set by municipalities, up from the current 0.05%. But before the apartment is taxed, citizens will have the opportunity to benefit from a deduction from the value of the property, but not more than 50% of its value.
So for a house worth 100,000 euros, the value can be reduced by 50% and for the remaining 50 thousand euros, an annual fee of 50-100 euros can be paid, depending on the tax rate that will be determined by the municipality. (The property value reduction will be up to 50% but not more than the ceilings set for the 7 categorizations that have been made to the municipalities.)
For those who own two or more apartments, they will only receive a deduction from the value of the property for the first apartment, while for the others they will pay as much as the apartment is worth. So for the second apartment, even 100 thousand euros, they will pay 100-200 euros in annual tax. So the tax will automatically be twice as high for those who have more than 1 apartment.
According to the arguments given in the report, increasing taxation for first homes but even more so for those who own 2 or more homes will also curb speculation with property prices, since the higher the price, the higher the tax.