With two “cutter” that significantly limit the number of beneficiaries, the measure of the three-year exemption from income tax on rental income will finally be implemented for those owners who will make their empty or short-term rental homes available on a long-term rental basis. leases.
However, owners who make use of the exemption will receive rent for three years without incurring income tax of 15% to 45%.
Due to the non-collection of income tax, the rents that most beneficiaries will receive over a three-year period will, according to calculations, be increased by 16.62% to 36.2%.
In particular:
a) It is a condition for the exemption to be granted that the property has been vacant and leased or short-term leased for at least three years before September 8, 2024.
b) The exemption will only apply to residences up to 120 m2. According to the final form of the measure, promoted by the government, the exemption may be used by owners who proceed with long-term leases, under the conditions referred to above, in the period from 8 September 2024 to 31 December 2025. In particular, as specified by Ms Hatzidakis, Petralias and Dimas, any owner who converts between 09/08/2024 and until 31/12/2025 an empty property (as indicated by E2 for at least 3 years) or a property that has been under a short-term lease (for at least 3 years) into a long-term lease of at least 3 years will be exempt from income tax on the rental income of said property for 3 years. The measure concerns residences of up to 120 m2. Its implementation is estimated to result in a loss of revenue of approximately 3 million euros for 2025 and 13 million per year for the years 2026-2028.
The data
According to data presented by Mr. Petralias:
- In 2023, 995,509 rights were registered on properties that remained vacant and occupied for 3 years, from the beginning of 2020 to the end of 2022. These rights related to approximately 600 thousand properties.
- In 2024, these figures have decreased by around 1.2% so far, i.e. 11,817 rights or around 7,000 properties. In other words, only 7,000 out of 600,000 properties returned to active leases this year. As Petralias clarified, with the implementation of the three-year tax exemption measure, the management of the Ministry of Economy and National Finance does not believe that all 600,000 vacant properties in 2023 will be returned to active long-term leases, but that the percentage of them that will return to the rental market will increase significantly. As is already known, annual rental income, after being reduced by 5% due to the automatic deduction of operating expenses without supporting documents, is taxed regardless of the first euro with a scale of rates that amounts to:
- 15% for the first 12,000 euros of annual income,
- 35% for the next 23,000 euros of income, i.e. for the part of the income from 12,000.01 to 35,000 euros,
- 45% for the portion of income exceeding 35,000 euros. Granting of subsidies Finally, it is important to clarify an additional benefit that this regulation will bring to owners who benefit from it: that tax-exempt rents will not be charged to the owners’ household income and will therefore not be taken into account in the income criteria for the granting of various social benefits.