The final abolition of the 24% VAT measure on newly built properties seems to be getting closer, with the suspension of its imposition until 2026.

The government's economic staff is proceeding with the final arrangements for the measures that Prime Minister Kyriakos Mitsotakis will announce during the Thessaloniki International Fair (TIF).

The zero VAT on new buildings is to be incorporated into the TIF basket as, in combination with the freezing of the revaluation of the objective values ​​of properties and the capital gains tax until the end of 2026, it is estimated that it will act as a catalyst for the construction of more homes.

VAT and extension

With the extension of the suspension of the 24% VAT on construction, all real estate purchases and sales will continue to be subject to only a 3% transfer tax.

The VAT “freeze” will apply to all undisposed properties of the developer, from all building permits that have been issued and concern either his own properties or properties that he builds himself with the compensation system, until the suspension application.

Market players report that the suspension of VAT on new buildings is a key ally and incentive for each developer and investor who wishes to invest in the Greek real estate market.

For example, for a residence worth 200,000 euros, the purchase cost with 24% VAT is 248,000 euros. With the suspension of VAT, the price of the same property drops to 206,000 euros, since only a 3% transfer tax is imposed, and thus the buyer pays 42,000 euros less.

VAT in 2006

VAT on newly built properties was applied for the first time on January 1, 2006 (law 3427/2005) with the exception of the first residence. Until then, real estate purchases and sales were only subject to transfer tax. In the first year of application of the measure, the VAT rate was 19%, only to be increased to 24% during the years of the Memoranda.

VAT on new buildings remained for 13 years, causing many distortions in the market. The government in 2019 decided on a three-year VAT suspension from January 1, 2020 to December 31, 2022, with the aim of stimulating the construction and real estate market, which had collapsed during the crisis. The extensions of the zero VAT continued, with the last one expiring at the end of 2025. The suspension includes cases of new permits as well as old permits issued since January 1, 2006.

Source: in.gr