Greek Tax Trap changes

[Carolina]

I seemed to recall that when the concept of assessing tax on the basis of presumed income was challenged in the court, the court ruled that it was legal BUT it could not be used to tax imaginary income.

If, however, someone has worked for a number of years, made savings that are consistent with his/her income over those years, has lost his or her job and now claims that he/she is living on those savings then I think the tax authority should be made to prove that they are not.

Yet, they are proposing taxing imaginary income and savings, regardless.

[Topdriller]

Because the Greeks, as a nation, have evaded tax for decades you can understand why the Government, corrupt and polarised as it is, resorts to taxing tangible assets ie houses, cars, boats etc. You can even understand, iniquitous though it is, why they've turned to 'imputed income' in an attempt to get taxes into their coffers.

I agree with Warwick, if the tax authorities clamped down on the accountants, lawyers, doctors, politicians etc. who often pay little if any tax then perhaps the struggling working classes wouldn't feel so hard done by.

Jon

[altohb]

May I repeat - this isn't new. The thresholds have changed, but they have been taxing people on "imaginary" income for some time - I know, because I'm one of them!

[Carolina]

I believe you do though have a choice to some extent in that you can declare yourselves non resident for tax purposes as many expats seem to do and transfer cash annually to cover the imputed income cost of a home, car etc.

But I do agree that the whole imputed income issue is ridiculously unfair to a lot of ordinary people (excluding accountants, doctors etc ) and expats , but to do the same now to the impoverished unemployed is just incomprehensible.

[johnincrete]

Just a thought: if a Greek person who has no income is taxed as if they had, how are the tax authorities proposing to collect something from nothing?

[Carolina]

They don't care how John, I guess they just expect people to beg or borrow it.

[johnincrete]

They don't care how John, I guess they just expect people to beg or borrow it.

And what if they can't?

[Phaedra]

Take possession of their home??

[Retired in Crete]

Take possession of their home??

Ah but will they pay the rent?

John

[Tim]

It might also be of help to the estimated 30% of Cretan ex-pat residents currently trying to sell their Cretan idylls so they can return to the UK!

Jon

This is a suprising figure, Jon. Any idea where it comes from? Worrying too, if the market is saturated with homes that won't sell - prices should, in theory, plummet. Which is no good to anybody.

Tim

[Kilkis]

...This is a suprising figure, Jon. Any idea where it comes from? Worrying too, if the market is saturated with homes that won't sell - prices should, in theory, plummet. Which is no good to anybody.

Tim

I have no idea what the figure is but friends who live in Plaka tell me that a lot of UK ex-pats near them have simply shut up their houses and returned to the UK because they can't find buyers. Even in my area, south west of Chania where there isn't a high concentration of ex-pats, I know at least two houses that are rented out because they didn't sell and another two that are just shut up. In all four cases the owners are back in the UK. I also know of some ex-pats who were living here in rented accommodation who have relocated back to the UK. I certainly wouldn't argue with Jon's figure and it could well be higher.

Warwick

[Tim]

Thanks for that, Warwick.

Like I said, worrying. I can think of several scenarios as Greece/Crete moves forward that may well involve house owners, myself included, having to walk away from their investments for good.

Tim

[mouche]

...This is a suprising figure, Jon. Any idea where it comes from? Worrying too, if the market is saturated with homes that won't sell - prices should, in theory, plummet. Which is no good to anybody.

Tim

I have no idea what the figure is but friends who live in Plaka tell me that a lot of UK ex-pats near them have simply shut up their houses and returned to the UK because they can't find buyers.
Warwick

And at the same time new houses are being built in the area (Plaka). Just within a few hundred meters from our (newly built) house we have seen a total of six new houses in the last year or so, with buyers from Norway and Russia. We know of another five houses under construction relatively near by (walking distance) being built with the owners coming from England, Norway, Germany and France so all is not doom and gloom but quite q few of the houses for sale in the area are of poor quality and not attractive in a rather selective market.

[Jean]

And at the same time new houses are being built in the area (Plaka). Just within a few hundred meters from our (newly built) house we have seen a total of six new houses in the last year or so, with buyers from Norway and Russia. We know of another five houses under construction relatively near by (walking distance) being built with the owners coming from England, Norway, Germany and France so all is not doom and gloom but quite a few of the houses for sale in the area are of poor quality and not attractive in a rather selective market.

And because many people paid inflated prices they are not willing to drop their selling price to a realistic (and much lower, in the current market) price so they simply won't sell and it is a better proposition to build a new house.

[Topdriller]

Tim,

The figure of 30% may well be on the low side. There are some areas populated by Brits where the figure would appear to be higher.

Because a significant number of ex pats moved here when the housing market was high and sterling bought €1.50 or so euros for each pound spent Crete attracted a large number of older folk looking for sunshine and a way to make their savings / pensions stretch further than they would in the UK.

A pension of £1000 per month would have given you €1500 to spend but over the last four or so years this figure has dropped to around €1150 per month while at the same time costs here have gone up exponentially e.g. fuel, imported goods, property tax etc.

As well as this, most properties here are technically illegal and whilst this doesn't affect the locals too much it does cause a problem for people wishing to sell their house ie they have to pay the legalisation costs before they can sell their property.

The effect of all this + the fact that Northern Europeans (and by definition the likely buyers of ex-pat properties here) have also felt the cold wind of uncertainty means there are less lower / middle income people able or willing to buy houses on Crete. (Basically its far harder to get a mortgage theses days)

The knock on effect means expats here are having to significantly drop their price even to get a potential viewing, never mind a confirmed sale.

For example, one of our friends bought a small 50 sqm house four or so years ago on the east side of the island and spent the same again renovating it. The total cost was around €65,000. For the past two years she has been trying to sell the property, due to a change of circumstances in the UK, and discovered she needed to pay an additional €5500 to legalise it. (The reason being there was no permission for the second floor the previous owner had constructed.). She recently found a buyer but the price now was €35,000!

A 50% drop may seem like a lot but what do you do when the market is flat, there's a flood of other properties for sale and you need the money?

Perhaps the only saving grace for some is if they bought or built a €150,000 house when sterling was high then even if they sell for €115,000 they will at least go home with the £100,000 they initially spent.

It's tough if you're selling right now and definitely a concern if you 'have' to sell, rather than 'want' to sell.

Jon