7 ms·

Nobody would buy the house (apart from foreigners) because it is now linked to the tax that everybody wants to avoid. Also cash flow is a big problem for everyb

Nobody would buy the house (apart from foreigners) because it is now linked to the tax that everybody wants to avoid. Also cash flow is a big problem for everybody so it is hard to find somebody that has 90.000 in cash and also willing to buy it. Move to where? Another city? Another country? Unemployment is everywhere in Greece. I am not even mentioning the sentimental factor of being forced to sell your parents house for no particular reason. Also if it was that easy to move somewhere else and find a job, you would have done it already (you would not wait for the government to create this tax and then think about it) Here is a third scenario for you reading pleasure 3) I am 75 years old living with my wife who is 70 years old in the house that we bought in 1950. We are both retired farmers. Our pension is 500 euros in total. In 1950 the area we selected for our house turned out to be a popular one (in 1950 it was just an empty field). Government passes the law and our house has a value of 500.000 (because of the area around it). Now out of the blue we have to pay property tax. What do we do?

nugget 10y ago
> Nobody would buy the house If you put this hypothetical 90k euro house up for sale at a public auction tomorrow, what would it sell for? 50k? 70k? Real assets are usually sale-able, albeit perhaps for less than the owner thinks the asset is worth. > Move to where? Another city? Another country? Unemployment is everywhere in Greece. Since Greece is still in the EU, you can move to any member country right? UK, Germany, France? Certainly there must be places in the EU where the economy is better and there are more opportunities. People have been migrating around the world chasing economic opportunities for thousands of years. A million Syrians just traveled through Greece on their way north in search of this. > Government passes the law and our house has a value of 500.000 (because of the area around it). Now out of the blue we have to pay property tax. What do we do? It seems that what has effectively happened is that the Greek Government has decided to confiscate a large part of the country's wealth through extremely high property tax rates. As other posters on this thread have mentioned, if the tax rate is 1% but the appraised value is 3x the actual market value, then the real tax rate is 3% and your Government is just playing games to try and hide the confiscation. Personally I would vote for revolution - national default, totally new political leadership - and start to rebuild the country from scratch. Anything is better than decades of externally enforced austerity crippling a country's spirit as reflected in everything I read these days about Greece.
- Ntrails 10y ago
  > Personally I would vote for revolution - national default, totally new political leadership They tried that. Turns out politicians aren't actually very trustworthy...
  - deleted 10y ago
    [deleted]
  - erispoe 10y ago
    Turns out when people have to actually govern the thing they're pragmatists. That's what happened to Syriza. They're not "untrustworthy", they're just doing the best with the hand they inherited considering what EU politics are right now.
    - charlesdm 10y ago
      It's always nice to say you'll demand x, y and z from a third party during elections. But if you have no leverage, and the other party says no, there's little one can do.
- CyberDildonics 10y ago
  > If you put this hypothetical 90k euro house up for sale at a public auction tomorrow, what would it sell for? 50k? 70k? I'm not a mathematician, but I think that would make it a 50k or 70k house.
  - pyb 10y ago
    Well put. If the house, 'valued' by the government at 300k, is actually a '90k' house that will in fact sell for 50k, perhaps it's time to get real, save time and call it a EUR 50k property from the start. Everything sells for the right price. As for the issue of finding a buyer, I am hearing rumours that many Greeks have built up sizeable assets, from not paying very much tax in the last few decades. Many areas in Greece are also popular with European buyers.
Kalium 10y ago
> 3) I am 75 years old living with my wife who is 70 years old in the house that we bought in 1950. We are both retired farmers. Our pension is 500 euros in total. In 1950 the area we selected for our house turned out to be a popular one (in 1950 it was just an empty field). This was regarded as a major incipient problem in California at once point. So a policy to address it was put in place - Proposition 13. It caps property tax increases to a quite low level. Cities and counties cope by voting on a random assortment of taxes and assessments every two years. In major cities, where most people rent, this means property owners have their taxes go up very unpredictably. Though rarely more than single digit percentages. This sounds great, but in practice it's created havoc. Turns out some solutions are worse than the problems.
- HillaryBriss 10y ago
  > In major cities, where most people rent, this means property owners have their taxes go up very unpredictably. Interesting. I've heard about the predictable 2% YOY residential property tax increases allowed by Prop 13 (in Los Angeles), but I haven't heard about people experiencing significantly larger, unpredictable property tax hikes. I'm curious about the very unpredictable property tax hikes you're describing. How big have these been? Are these on apartment buildings or other commercial properties?
  - Kalium 10y ago
    Prop 13 limits direct property taxes, but voter-approved direct assessments aren't limited. Depending on how votes go in Oakland and Alameda County next week, assessments might go up anywhere from $0 to $600+/yr on a single family home. I cited places where most people rent because it's easier for renters to think of property taxes as taxes that get paid by people who aren't them and it's always easier to vote for taxing someone else. Some of them are property value percentages. Some of them are flat parcel taxes. The two fall differently on multi-family and single-family buildings. I believe commercial property is generally not exempt. I'm not aware of any tax hikes that large in recent history, but sometimes the re-assessment at sale from Prop 13 can cause jumps bigger than that.
- jtmcmc 10y ago
antisthenes 10y ago
Out of all the scenarios you posted, this is actually the easiest to solve: > 3) I am 75 years old living with my wife who is 70 years old in the house that we bought in 1950. We are both retired farmers. Our pension is 500 euros in total. In 1950 the area we selected for our house turned out to be a popular one (in 1950 it was just an empty field). Government passes the law and our house has a value of 500.000 (because of the area around it). Now out of the blue we have to pay property tax. What do we do? You sell the house and move somewhere with a cheaper COL. Presumably the assumption here is that neither you nor your wife work, so you are unproductive members of society (this is meant without negative connotation). However, there's no reason you should continue to be subsidized by the people living around you who are, again presumably, fine with paying the property tax. They are more able to put this popular area to good economic use.
- nitrogen 10y ago
  I want to make explicit the sentiment that I think underlies some of the comments here. For much of Western human existence, families could own, inherit, and stay in one place for generations. But now, catastrophic value inflation, property taxes, eminent domain, etc. threaten that expectation of stability. It shouldn't be surprising that people who don't value a migratory lifestyle are upset by being forced to abandon what they see as their little demesne.
  - hx87 10y ago
    > For much of Western human existence, families could own, inherit, and stay in one place for generations. ...if they weren't expropriated by their overlords, driven off by war/disease/famine/poverty, etc. Staying in one region was common, but having the same house for generations on end was still an exception. Besides, moving every 30 years or so is hardly migratory.
  - return0 10y ago
    Well to be honest most of these houses were build in the past 3 decades from the parents so their children have a ready-made home for them. We had a property boom in greece that was fueled by dirt-cheap loans from easy ECB money. Now the loans turned red, people don't have jobs, taxes have skyrocketed. It's a mess. But somehow the market has to move. Standing still is not a solution.
akytt 10y ago
You sell the house. You have invested your money well, your property has increased in value. Congratulations! Now pay a bit of taxes to support the people who have not been as fortunate and stop complaining. Your property taxes are actually lower than in other countries by a margin, how can they be a problem, then? Quite frankly I think the notion of actually having to pay taxes has not been there for decades and it just feels tough to get over it once other people stop financig your lifestyle.
- lifty 10y ago
  Government valuation is probably higher than the actual price that the house would get on the market. Add to that all the red tape involved in selling the house.
- Bartweiss 10y ago
  > You sell the house This is a way bigger hurdle than anyone is making it out to be. There are huge legal barriers to property sales, including requirements for energy audits and certification that the construction is wholly legal - which is probably isn't. Just like in the US, a great many safe and livable Greek properties violate zoning laws. Why on earth are we assuming that Greece has smooth-running property markets that allow people to sell houses for their nominal (or any) value?
- 1337biz 10y ago
  Those people who have worked their whole life their butt of just to finnally buy a home for their family, are certainly greatful for your advice.
hammock 10y ago
If no one is willing to buy it for 90,000, is it really worth 90,000? (Spoiler: no)
cdelsolar 10y ago
> I am 75 years old living with my wife who is 70 years old in the house that we bought in 1950. We are both retired farmers. Our pension is 500 euros in total. In 1950 the area we selected for our house turned out to be a popular one (in 1950 it was just an empty field). You bought the house when you were 9 and 4 years old, respectively?
- muyuu 10y ago
  Doesn't make a real difference, in some areas of Greece prices multiplied in mere years during urbanisation periods and during asset bubbles. Also, in rural areas plots and properties can go back several generations quite commonly.
return0 10y ago
So your house price went from EUR10000 (optimistic) to EUR 500000 (actual price 8 years ago , nowadays ~40% cheaper). You're still property-rich. why are you complaining?
- Bartweiss 10y ago
  Give the article another look. There are huge legal barriers to property sales, including requirements for energy audits and certification that the construction is wholly legal - which is probably isn't. Just like in the US, a great many safe and livable Greek properties violate zoning laws. Real assets are salable, but in this case the government has crippled the market's ability to clear. If your market can't clear, you can easily end up with a high value asset which is totally impossible to sell. That's the Greek situation, where the requirement to pay tax on a house doesn't mean it's actually possible to sell it for value.
  - return0 10y ago
    Yes transactions costs are high in greece, but it's not what stopping people from buying. Prices are still too high. Rental yields do not justify buying at this time[1], even for newer constructions that are 100% legal. While the government could certainly reduce transaction costs, the homeowners themselves are sabotaging the market[2]. FYI i live in greece and could not afford a house during the boom years. Now i can but it's just a bad deal. It's cheaper to rent. 1. http://www.globalpropertyguide.com/Europe/Greece/Rental-Yields http://www.globalpropertyguide.com/Europe/Greece/Rental-Yiel... 2. http://www.tornosnews.gr/en/greek-news/society/19928-new-york-times-%E2%80%9Chorror-movie%E2%80%9D-on-home-foreclosures-in-greece.html http://www.tornosnews.gr/en/greek-news/society/19928-new-yor...
brianwawok 10y ago
So as somebody NOT from Greece (from the US in fact).. I have always had to pay tax on any property I own. If someone died and I got their property.. I would need to pay tax. Not sure how that is "unexpected"? If the tax was more than I could afford, I would sell it. If I liked the place, maybe I would move there.
- return0 10y ago
  Different perceptions - Greek market was and still largely is heavily regulated and closed. It will take many years for people to adapt to a free-er market. It doesn't help that government does not communicate it to people. For example, there was no real property tax in greece. Then after the crisis they instituted an "Emergency tax" on property that they promised "would be just one-off". Of course it became a two-off, 3-off etc. Greek govt. and the electorate have been playing cat and mouse for decades.
- linkregister 10y ago
  Estate tax in the U.S. is nil under $5 million [1]. If you paid tax on property you inherited, then I congratulate you on your windfall and mourn the loss of that relative. 1. https://en.wikipedia.org/wiki/Estate_tax_in_the_United_States https://en.wikipedia.org/wiki/Estate_tax_in_the_United_State...

nugget 10y ago

> Nobody would buy the house If you put this hypothetical 90k euro house up for sale at a public auction tomorrow, what would it sell for? 50k? 70k? Real assets are usually sale-able, albeit perhaps for less than the owner thinks the asset is worth. > Move to where? Another city? Another country? Unemployment is everywhere in Greece. Since Greece is still in the EU, you can move to any member country right? UK, Germany, France? Certainly there must be places in the EU where the economy is better and there are more opportunities. People have been migrating around the world chasing economic opportunities for thousands of years. A million Syrians just traveled through Greece on their way north in search of this. > Government passes the law and our house has a value of 500.000 (because of the area around it). Now out of the blue we have to pay property tax. What do we do? It seems that what has effectively happened is that the Greek Government has decided to confiscate a large part of the country's wealth through extremely high property tax rates. As other posters on this thread have mentioned, if the tax rate is 1% but the appraised value is 3x the actual market value, then the real tax rate is 3% and your Government is just playing games to try and hide the confiscation. Personally I would vote for revolution - national default, totally new political leadership - and start to rebuild the country from scratch. Anything is better than decades of externally enforced austerity crippling a country's spirit as reflected in everything I read these days about Greece.

Ntrails 10y ago
> Personally I would vote for revolution - national default, totally new political leadership They tried that. Turns out politicians aren't actually very trustworthy...
- deleted 10y ago
  [deleted]
- erispoe 10y ago
  Turns out when people have to actually govern the thing they're pragmatists. That's what happened to Syriza. They're not "untrustworthy", they're just doing the best with the hand they inherited considering what EU politics are right now.
  - charlesdm 10y ago
    It's always nice to say you'll demand x, y and z from a third party during elections. But if you have no leverage, and the other party says no, there's little one can do.
CyberDildonics 10y ago
> If you put this hypothetical 90k euro house up for sale at a public auction tomorrow, what would it sell for? 50k? 70k? I'm not a mathematician, but I think that would make it a 50k or 70k house.
- pyb 10y ago
  Well put. If the house, 'valued' by the government at 300k, is actually a '90k' house that will in fact sell for 50k, perhaps it's time to get real, save time and call it a EUR 50k property from the start. Everything sells for the right price. As for the issue of finding a buyer, I am hearing rumours that many Greeks have built up sizeable assets, from not paying very much tax in the last few decades. Many areas in Greece are also popular with European buyers.

Kalium 10y ago

> 3) I am 75 years old living with my wife who is 70 years old in the house that we bought in 1950. We are both retired farmers. Our pension is 500 euros in total. In 1950 the area we selected for our house turned out to be a popular one (in 1950 it was just an empty field). This was regarded as a major incipient problem in California at once point. So a policy to address it was put in place - Proposition 13. It caps property tax increases to a quite low level. Cities and counties cope by voting on a random assortment of taxes and assessments every two years. In major cities, where most people rent, this means property owners have their taxes go up very unpredictably. Though rarely more than single digit percentages. This sounds great, but in practice it's created havoc. Turns out some solutions are worse than the problems.

HillaryBriss 10y ago
> In major cities, where most people rent, this means property owners have their taxes go up very unpredictably. Interesting. I've heard about the predictable 2% YOY residential property tax increases allowed by Prop 13 (in Los Angeles), but I haven't heard about people experiencing significantly larger, unpredictable property tax hikes. I'm curious about the very unpredictable property tax hikes you're describing. How big have these been? Are these on apartment buildings or other commercial properties?
- Kalium 10y ago
  Prop 13 limits direct property taxes, but voter-approved direct assessments aren't limited. Depending on how votes go in Oakland and Alameda County next week, assessments might go up anywhere from $0 to $600+/yr on a single family home. I cited places where most people rent because it's easier for renters to think of property taxes as taxes that get paid by people who aren't them and it's always easier to vote for taxing someone else. Some of them are property value percentages. Some of them are flat parcel taxes. The two fall differently on multi-family and single-family buildings. I believe commercial property is generally not exempt. I'm not aware of any tax hikes that large in recent history, but sometimes the re-assessment at sale from Prop 13 can cause jumps bigger than that.
jtmcmc 10y ago

antisthenes 10y ago

Out of all the scenarios you posted, this is actually the easiest to solve: > 3) I am 75 years old living with my wife who is 70 years old in the house that we bought in 1950. We are both retired farmers. Our pension is 500 euros in total. In 1950 the area we selected for our house turned out to be a popular one (in 1950 it was just an empty field). Government passes the law and our house has a value of 500.000 (because of the area around it). Now out of the blue we have to pay property tax. What do we do? You sell the house and move somewhere with a cheaper COL. Presumably the assumption here is that neither you nor your wife work, so you are unproductive members of society (this is meant without negative connotation). However, there's no reason you should continue to be subsidized by the people living around you who are, again presumably, fine with paying the property tax. They are more able to put this popular area to good economic use.

nitrogen 10y ago
I want to make explicit the sentiment that I think underlies some of the comments here. For much of Western human existence, families could own, inherit, and stay in one place for generations. But now, catastrophic value inflation, property taxes, eminent domain, etc. threaten that expectation of stability. It shouldn't be surprising that people who don't value a migratory lifestyle are upset by being forced to abandon what they see as their little demesne.
- hx87 10y ago
  > For much of Western human existence, families could own, inherit, and stay in one place for generations. ...if they weren't expropriated by their overlords, driven off by war/disease/famine/poverty, etc. Staying in one region was common, but having the same house for generations on end was still an exception. Besides, moving every 30 years or so is hardly migratory.
- return0 10y ago
  Well to be honest most of these houses were build in the past 3 decades from the parents so their children have a ready-made home for them. We had a property boom in greece that was fueled by dirt-cheap loans from easy ECB money. Now the loans turned red, people don't have jobs, taxes have skyrocketed. It's a mess. But somehow the market has to move. Standing still is not a solution.

akytt 10y ago

You sell the house. You have invested your money well, your property has increased in value. Congratulations! Now pay a bit of taxes to support the people who have not been as fortunate and stop complaining. Your property taxes are actually lower than in other countries by a margin, how can they be a problem, then? Quite frankly I think the notion of actually having to pay taxes has not been there for decades and it just feels tough to get over it once other people stop financig your lifestyle.

lifty 10y ago
Government valuation is probably higher than the actual price that the house would get on the market. Add to that all the red tape involved in selling the house.
Bartweiss 10y ago
> You sell the house This is a way bigger hurdle than anyone is making it out to be. There are huge legal barriers to property sales, including requirements for energy audits and certification that the construction is wholly legal - which is probably isn't. Just like in the US, a great many safe and livable Greek properties violate zoning laws. Why on earth are we assuming that Greece has smooth-running property markets that allow people to sell houses for their nominal (or any) value?
1337biz 10y ago
Those people who have worked their whole life their butt of just to finnally buy a home for their family, are certainly greatful for your advice.

hammock 10y ago

If no one is willing to buy it for 90,000, is it really worth 90,000? (Spoiler: no)

cdelsolar 10y ago

> I am 75 years old living with my wife who is 70 years old in the house that we bought in 1950. We are both retired farmers. Our pension is 500 euros in total. In 1950 the area we selected for our house turned out to be a popular one (in 1950 it was just an empty field). You bought the house when you were 9 and 4 years old, respectively?

muyuu 10y ago
Doesn't make a real difference, in some areas of Greece prices multiplied in mere years during urbanisation periods and during asset bubbles. Also, in rural areas plots and properties can go back several generations quite commonly.

return0 10y ago

So your house price went from EUR10000 (optimistic) to EUR 500000 (actual price 8 years ago , nowadays ~40% cheaper). You're still property-rich. why are you complaining?

Bartweiss 10y ago
Give the article another look. There are huge legal barriers to property sales, including requirements for energy audits and certification that the construction is wholly legal - which is probably isn't. Just like in the US, a great many safe and livable Greek properties violate zoning laws. Real assets are salable, but in this case the government has crippled the market's ability to clear. If your market can't clear, you can easily end up with a high value asset which is totally impossible to sell. That's the Greek situation, where the requirement to pay tax on a house doesn't mean it's actually possible to sell it for value.
- return0 10y ago
  Yes transactions costs are high in greece, but it's not what stopping people from buying. Prices are still too high. Rental yields do not justify buying at this time[1], even for newer constructions that are 100% legal. While the government could certainly reduce transaction costs, the homeowners themselves are sabotaging the market[2]. FYI i live in greece and could not afford a house during the boom years. Now i can but it's just a bad deal. It's cheaper to rent. 1. http://www.globalpropertyguide.com/Europe/Greece/Rental-Yields http://www.globalpropertyguide.com/Europe/Greece/Rental-Yiel... 2. http://www.tornosnews.gr/en/greek-news/society/19928-new-york-times-%E2%80%9Chorror-movie%E2%80%9D-on-home-foreclosures-in-greece.html http://www.tornosnews.gr/en/greek-news/society/19928-new-yor...

brianwawok 10y ago

So as somebody NOT from Greece (from the US in fact).. I have always had to pay tax on any property I own. If someone died and I got their property.. I would need to pay tax. Not sure how that is "unexpected"? If the tax was more than I could afford, I would sell it. If I liked the place, maybe I would move there.

return0 10y ago
Different perceptions - Greek market was and still largely is heavily regulated and closed. It will take many years for people to adapt to a free-er market. It doesn't help that government does not communicate it to people. For example, there was no real property tax in greece. Then after the crisis they instituted an "Emergency tax" on property that they promised "would be just one-off". Of course it became a two-off, 3-off etc. Greek govt. and the electorate have been playing cat and mouse for decades.
linkregister 10y ago
Estate tax in the U.S. is nil under $5 million [1]. If you paid tax on property you inherited, then I congratulate you on your windfall and mourn the loss of that relative. 1. https://en.wikipedia.org/wiki/Estate_tax_in_the_United_States https://en.wikipedia.org/wiki/Estate_tax_in_the_United_State...