By Vangelis Dourakis

The new regime hides “traps”. tax exemptions which the State legislated for those who choose either to “open” their empty apartments in order to
lease out, or move away from short-term leases and make them available for long-term leases. Although the lure of the three-year tax exemption was adopted to deal with the housing crisis, the whole process is nevertheless “mined” by the multiple exemptions and “small
letters” of the relevant provisions.

Her circular AADEwhich activates the three-year rental tax exemption provisions of the recent tax law, highlights these “details” that can cost property owners dearly.

What are the “pitfalls” of the new regime?

What becomes clear right from the start is that the range of beneficiaries is limited to those who had declared to the tax office by December 5, 2024 that they have closed properties and intend to rent the residences on a long-term lease within 2025.

This automatically means that outside of the three-year tax exemption are those who hastened to declare their properties closed or available for short-term rental, after December 5.

As further clarified in the circular issued by Independent Public Revenue Authoritythe properties must have been declared vacant in the tax returns of the years 2022, 2023 and if the contract is concluded in 2024 and 2025.

For those that were used for short-term rental, this use should have been declared to AADE for at least one year before their conversion to long-term rental.

As the circular typically states “the fulfillment of the conditions for the present exemption can only be proven by timely declarations of information and income tax and, especially with regard to the years 2022 and 2023, by declarations that have been submitted by the date
of this publication (19-12-2024)”.

When must the … tax exemptions be retroactively returned?

The AADE circular also defines when a real estate owner loses the three-year tax exemption. This happens if within three years the property:

a) is vacated, the exemption ceases to apply from the tax year in which it is vacated
b) made available for short-term rental, the exemption ceases to apply from the first year of the rental.

The provision stipulates that the measure of tax exemption applies to properties up to 120 sq.m. and as mentioned above in contracts concluded between September 8, 2024 and December 31, 2025.

Also, the lease agreement lasts 36 months after the month it is signed. Another point that those who want to take advantage of the provisions of the law should pay attention to is that if the residence within the three years of the contract is made available for a short-term lease, the exemption ceases to apply retroactively from the first year of the lease, in which case it will also be issue of retrospective payment of income tax on all rents previously collected which were exempt from income tax.