New objective values not before March; FMAP shelved for now

The government is asking creditors to grant another extension to the deadline for updating objective values – the property rates used for tax purposes – while the replacement of the Single Property Tax (ENFIA) by a Large Property Tax (FMAP) is put off for at least a year.

Sources say that in the last round of talks with creditors’ mission chiefs in Athens, the government asked for the adjusted objective values to apply from March 2018 instead of January 1 as foreseen in the bailout agreement.

The Greek side has once more cited its inability to bring objective values down to market prices, forcing the Finance Ministry to resort to the traditional method of changing the official rates through local committees. If the creditors’ representatives are convinced upon their return at the end of the month that the necessary actions have been taken they will grant the extension, though that would have significant consequences on the calculation of property taxes.

To begin with, all transactions and property concessions such as inheritances will have to be recorded according to existing objective values. Obviously an extension would increase uncertainty in the market as possible buyers will have to guess whether the property they intend to acquire will sustain an increase or a reduction to its objective value.

Second, next year’s ENFIA will probably have to be calculated based on the old objective values, unless the calculation is postponed until March so that the new values are used, generating changes and concerns among property owners.

What is certain is that ENFIA will continue for another year at least, as plans for the FMAP are postponed due to fiscal and technical problems, even though the government was eager to push this measure through and provide some relief to the owners of smaller properties.

Were FMAP to be introduced with the goal of bringing in 3.2 billion euros, the 2.5 million owners of assets valued at up to 50,000 euros and the 1.5 million owning assets of up to 100,000 euros would have to be exempt, passing the burden to the rest of the owners; they would face an average rate of more than 1 percent of their assets’ value every year, which would constitute the world’s biggest property tax.