How to purchase Real Estate in Greece
Legal information for buying property in Greece.
Angels Greek Island Homes
Securing Your Home
Once you have found your property and agreed a price you will need to make a 10% deposit to secure it. This is not returned if you decide to drop out of the sale. It is essential that you secure the services of a lawyer to help in the transaction process. The lawyer will advice you in the procedures, it is usual for this deposit payment to be fully documented and you can subject this payment to a refund being made if the title searches or other legal matters prevent the sale from going ahead on behalf of the vendors. If you have any doubts about the legalities of the sale, you must ensure that it's your 'head not your heart' that rules in this matter and that you are absolutely satisfied with the legalities of the sale before you proceed.
When your deposit has been drawn, this confirms that the vendor is proceeding and at this point should take the property off the market to await completion of contracts handled by both parties lawyers. Once this has been done a date will be agreed for you to pay the Purchase Tax, balance of purchase price and legal fees.
Unless you already have a lawyer familiar with Greek law it is best to engage a local lawyer who is familiar with the area you intend to buy in. They will be used to dealing with the local sales agents and Public Notaries, in addition they will often have knowledge about the vendor and any issues that may not be immediately apparent. They will also be well acquainted with local planning regulations and any restrictions that may apply.
Your lawyer will carry out all the necessary searches, and lawyers are required to make representation of all legal procedures before the Notary Public who oversees the searches and who will not proceed the transaction agreements until he/she is satisfied with land registry searches.
Before the contracts are signed you have to pay the Purchase Tax, after this the notary registers the deeds with the Land Registry in your name. In some locations there are two kinds of Land Registries, firstly the older way in which the registration is done in each owner's name and secondly the new way (Cadestre) in which each property has a number and the registration is done for the property.
If you cannot read Greek, it is advisable that you have an interpreter present so that the contracts can be translated for you before you sign them. You can choose your own translator or ask the notary to to find someone for you and you can insist that he/she is present when you sign the contracts. In small locations there are not usually professional interpreters so it can be difficult to find someone if you need an interpreter who speaks a language other than English, German or French. After the contract is signed you can ask that a translation copy be made for you, this is done at the Ministry of Foreign Affairs you have to pay for this and it also takes time.
If you intend to use your home only for holidays insurance can be arranged through your Greek Bank for fire and storm damage. However insurance for theft may only available if you live in your property throughout the year. There are companies that can offer full insurance (3rd party for example)
Setting Up a Bank Account
All transactions are in Euros. You will need to set up a Greek bank account to pay for your legal advice, transfer money and pay bills. You must now have a Greek Tax number to open an account.
There are foreign exchange brokers that can transfer large amounts to Greece according to the business rate. Payment of utility bills can be set up very easily by direct debit via the bank, and money can be transferred online.
There is no Government Property Tax levied as yet, although this may change in the future.
There is no Government Property Tax levied as yet, although this may change in the future.
Purchase tax is payable, for plots and houses situated outside of the borders of a village or town. It is paid at 7% up to a total purchase price of 15,000 euro, 9% is payable on amounts exceeding this. For properties situated within the borders of a town or village the tax is calculated at 9% and 11% for the same amounts.
Local Municipal Tax or Community Tax is currently calculated at 3% of the Purchase Tax and is paid together with the Purchase Tax.
Public Notary Approximately 2.5% of the objective price or Tax Office estimation of the value or on the price declared in the purchase contract if this is higher.
Land Registry 0.45%of the assessed price plus a fixed charge, currently15 euro.
Annual Property Tax An Annual Property Tax is charged on all properties having electricity or plots situated within the borders of a city, town or village. It is generally a small amount and is included within electricity bills. Many municipalities have not started to charge this yet because of the problems there have been in organising the collection of it.
Your Lawyer or Solicitor will normally charge between 1% and 2% of the sale value of the property. If he/she acts as a Power of Attorney on your behalf he/she may charge more.
Real Estate Agent
The Real Estate Agent's fees (normally 2% of the final purchase price) are usually paid by the buyer. Sometimes, the Estate Agent will take a fee from the seller as well.
All expenses for the conclusion of the final contract, including the tax on property transfer will be borne by the buyer. Each party will pay the fees of their legal representative who must be present at the signing of the contract, this is required by Greek Law.
There are currently no taxes to pay in Greece if the total value of the property or properties that you own does not exceed the value of 200.000 euro. The valuation of properties is carried out by the government, which provides published values for every type of property. In the case that a foreigner owns a building or buildings of which the total area exceeds 150 sqm, they are obliged to serve an income tax return every year to prove that the income, which the I.R.O (Internal Revenue Office) presumes that they have, (in order to be able to afford the costs associated with maintaining such a property), is not made in Greece but imported as a foreign currency with proof provided by pink slips. (Receipts from any bank which prove that you have changed foreign currency).
New Tax laws
New laws were brought in on January 2006 that will affect anyone wishing to buy or sell property in Greece . These are the imposing of 19% Vat on new buildings, (this applies to houses built after January 2006 - so from now on basically} and the introduction of capital gains tax on the resale of property. The government has designed these taxes to combat tax and real-estate speculation.
On the sale of houses built before January 2006 purchase tax will now be paid at 7%, 9% or 11% depending on the price the property is bought for.
The capital gains tax has a diminishing rate and is set against the number of years a person owns their property. If a property is sold with less that five years of ownership tax is charged at 20% of the price difference between the original purchase price and the price sold. If the property has been owned for between five to fifteen years then tax is charged at 15%, for properties owned for 15 to 25 years tax is charged at 5%. No tax is charged on properties owned for more that 25 years
Capital gains tax will be have to be paid if you buy a property built after January 2006 or if a property has been sold once since that date. In addition there is now a 1% tax to be paid on transfer of property.
In December 2005 The finance ministry announced a new set of objective values; the objective value determines the minimum value of properties and land for sale and the tax to be applied on property transfers. This has been done to converge market prices with objective values as presently the differential between the two can be very high.
Since the 1st of January 2005 everyone who owns real estate in the borders of the Greek State, is obliged to serve tax returns whether he / she has made income in Greece or not, together with a form in which he/she needs to declare any plot or building on which he/she has rights of ownership.
It is not necessary to attach copies of the title deeds or the building permits but these documents are necessary for the person who will fill in the forms with all the details (area in sq. meters, position, how old the building is etc.).
If you don't have a Greek tax number, a photocopy of your passport is necessary plus your father's name. Married couples who own property jointly serve one common tax return and will fill out one form for any real estate they both own.If you want to transfer a property a certificate that you have filled out and served this form will be necessary and there will be fines for not doing it.
Greece is slowly changing its mortgage and lending criteria system, which used to be quite difficult, to fall in line with other EU countries. But beware as interest rates in Greece can be among the highest in the European Union and the procedure quite daunting. Some people have used their existing properties at home to raise finance to buy their Greek property outright thus saving on interest and hassle. Mortgages are available on residential properties through International Mortgage Brokers
All EU citizens have equal rights concerning the purchase or sale of property in Greece. Non EU citizens are also free to buy property in Greece, however with some restrictions as described bellow. The documents required for signing a property-purchase contract are:
Both the buyer and the seller must provide:
- A valid passport (or a legal identity card for EU citizens only)
- A Greek fiscal number which is obtainable by non Greek citizens, within 5 working days by the Greek Tax Authorities.
- The seller should provide a series of certificates such as a "clean" B' Tax certificate, a certificate from the Municipality that he/she doesn't owe the Annual Property Tax, a certificate that no Inheritance Tax is owed ( if the vendor owns the property through inheritance) etc.
- An additional special permission is required for the purchase of properties close to the Greek borders. Such permission will be issued by the local Department Authorities and is not granted to non EU citizens.
- Non EU citizens owning property does not confer EU citizenship, nor does it allow you to enter the EU without a normal visa.
According to Greek law, the purchase contract, known also as a "Purchase Deed", is signed by the buyer and the seller in the presence of:A Public Notary - A lawyer appointed by the buyer - A lawyer appointed by the seller
The buyer's lawyer is liable to investigate at the Land Registry that the property being bought is free and clear of any charge, lien, mortgage or municipal taxes, damages to neighbouring owners etc. This investigation, held by the buyer's lawyer, is the guarantee that the Title Deed of Ownership and the relevant certificates issued by the land registry, show that no third party claim or challenge of any kind exists.
You must make sure that the property is sold and will be delivered to the buyer, with the benefit of full vacant possession.
© 2008 Angels Greek Island Homes Limited.