Every week, Mansion Global poses a tax question to real estate tax lawyers. Here is this week’s question.
Q: I’m an American considering the purchase of a second home in Athens, Greece, or Lisbon, Portugal. What are their property taxes like?
In Greece, you can expect to pay a one-time Real Estate Transfer Tax of 3%, plus a municipality tax of .09%, said Costas Kallideris, partner and head of private clients at Zepos & Yannopoulos, a law firm in Athens.
The transfer tax is based on "the objective value of the real estate property or the actual purchase price, whichever is higher," he said. The Ministry of Finance determines the objective value, which considers what zone the property is in and factors such as which floor the home is on, how new the property is and how the home is owned.
More:How Will Rising Prices in Australia Affect My Property Taxes?
The yearly property tax Unified Real Estate Tax (ENFIA) consists of a main tax and a supplementary tax. The main tax ranges from €0.001 to €13 (US$15) per square meter and is also readjusted by factors such as floor, age and facade, Mr. Kallideris said.
The supplementary tax is computed on a progressive tax scale of 0% to 1.15%. Property with a value of €600,000 (US$704,000), for instance, would be subject to a €1,525 (US$1,790) supplementary ENFIA tax, he said.
Property taxes are similar in Portugal.
A transfer tax and stamp duty are paid at the time of purchase. Stamp duty is calculated on 0.8% of the purchase price, said Luís Lapa e Borges, principal of Luís Lapa e Borges Lawyers in Loulé, Portugal.
The transfer tax, known as the Portuguese Property Acquisition Tax, varies with the price of the property. It’s usually 6% for residential homes priced at more than €575,000 (US$675,000), he said. Homes between €92,500 (US$109,000) and €575,000 (US$679,000) are assessed on a sliding scale from 1% to 6%, he continued.
For a second home, meaning a non-permanent residence, the tax is 6% on properties that cost more than €550,000 (US$645,000). The sliding scale also applies to second homes below that threshold Mr. Borges said.
More:Click to Read Tax Experts Share Answers and Advice for Readers’ Pressing Tax Questions
Every year, you would need to pay property rates that vary from 0.3% to 0.7% of the home’s rateable value, he said.
Rates are set by the municipalities and are affected by factors such as the property’s age, location and size, said Julija Cassiano Neves, founder of Fortum boutique law firm in Lisbon, Portugal. "Tax is imposed on the official value of the property, which is generally lower than the acquisition price paid for the sale," she noted.
"This year, Lisbon is charging 0.3%, of the rateable value of the property per year," Mr. Borges said.
In addition, beginning this year, there is an annual property tax that applies to individuals who own residential properties surpassing €600,000 (US$703,000) in total value, Ms. Neves said. The tax rate is 0.7% on the excess of €600,000 up to €1 million, and 1% on anything beyond that threshold, she said. For example, a home valued at €1.7 million, or two homes valued for a total of €1.7 million, would result in taxes of 0.7% on the €400,000 (the difference between €1 million and €600,000) plus 1% tax on the remaining €700,000.
Email your questions to editors@mansionglobal.com. Check for answers weekly at www.mansionglobal.com.