Registration and Legislation
There are no leasehold properties in Greece - they are all freehold. Land and property have to be registered with the nationwide Land Registry, but as this is a relatively new phenomenon and some are still registered under the Registry of Mortgages. Some of the Greek islands already have land registries, whilst others do not and you will have to register at the one closest to where you buy your property. Greece adheres to the European Regulations and Standards for building as well as strict rules to protect them from earthquakes, although properties built prior to the introduction of this legislation will not adhere to these rules. Urban apartment blocks are not allowed to go above five storeys and in towns and villages buildings are a lot smaller and generally no more than one or two storeys.
Buying your Greek Island Home
The buying process takes around 6-8 weeks to complete. You can buy your property with another party like your spouse or in the names of a company, children or legal heirs. You need to engage the services of a lawyer to conduct the required legal surveys and title checks. Ensuring good property title ensures that the property is free of any liens like mortgage notes and claims. The title check will take into consideration any liens and encumbrances served over the last 20 years. Your lawyer will also pay all of the property taxes on your behalf and you can arrange Power of Attorney through him if you are not residing on one of the islands permanently and are unable to attend all of the meetings associated with your purchase. He will also draw up the preliminary and final contracts necessary to facilitate the sale. You also need to get a surveyor to check out the building and inform you of any problem areas as well as ensuring that legal planning permission was obtained for all buildings on the site.
You will need to attend a notary's office to process your property purchase. He will draw up and review the documents pertaining to the sale and purchase to guarantee the legal transfer of the property between the buyer and the seller. He will also oversee the preliminary contract, which details the terms of the sale and the payment schedule. At the preliminary contract meeting you will be required to pay a 10% deposit to the lawyer to ensure that the seller takes it off the market. You can pay this by bank transfer, credit card or in cash. If any of the searches bring to light any problems you will get your full deposit back. Once all of the legal work is completed you will sign a final contract, which secures the property in full. Again if your lawyer had full Power of Attorney they can do this on your behalf. All fees and taxes have to be paid in full on signing the final contract; these are estimated at around 13-15% extra. If you change your mind about purchasing the property and the preliminary contract has been signed you will lose you deposit. If the vendor pulls out of the sale after signing the preliminary contract you will receive your deposit back and a further 10% as compensation.
Residency Permits and Property Ownership
If you are buying property on the islands of Crete, Rhodes or any of those located in the Eastern Aegean then you need a temporary residency permit known as a Blue Card. You can apply for a Blue Card at your local police station, but you need to allow around two weeks for it to be processed. If your lawyer has Power of Attorney he can do it for you. If you buy Greek property outside of these islands you do not need a residency permit unless your property is close to a national border. You can get round this system if you set up an offshore company based elsewhere in the EU in your name, based in an EU country. This will cost around 2,000 euro to set up and approximately 1,500 to 2,000 euro per year to maintain it.
Tax and Bank Accounts
You also need to attend the local tax office to obtain a tax registry number known as an AFM and you will need to present your passport and birth certificate. The AFM is issued there and then and is a free service to all property purchasers. You can get your lawyer to apply for this document on your behalf if you have granted him full Power of Attorney. Your property tax will be calculated according to the anticipated value of your property in accordance with the Greek tax laws. Usually a property's Tax Assessed Value is recorded as being considerably lower than its original purchase price.
You must also open a Greek bank account so that all payments can be made accordingly. It is a simple and fast process and there is no minimum deposit. You need to present your AFM and ID card or passport. This account is also proof that the money you are using to buy your home has been transferred to Greece from another country; this is important because you will be taxed on the money if you cannot prove this.
You will need to hire an accountant to ensure that you submit all necessary tax returns each year. You do not have to have an income in Greece to submit a tax return; every property owner regardless of nationality is required by law to register the property submitting form E9 to the Greek Tax Authorities. If you do not have an income in Greece this is a one off procedure. In addition to the E9 you must fill out an income tax form known as E1. If you do not earn an income in Greece you have to submit a nil return. You cannot submit either forms if you have not obtained your AFM number. Failure to declare a property will hinder you from selling it later and there are fines for anyone who does not submit their tax returns.
Capital Gains and Property Taxes
If your island property was purchased after January 1st, 2006, you will be subject to capital gains on the sale. The percentage depends on the length of time you owned the property; if you have owned it for less than five years capital gains will be charged at 20%, for those owned for between 5 and 15 years it is 10% and for any owned longer than this period you will only have to pay 5%. You will have to pay an annual property tax if your home is assessed at a value exceeding 243,600 euro.