By Vangelis Dourakis

The entire “fan” of interventions in taxes borne by all sorts of income has “opened” to the Ministry of National Economy and Finance: In the context of planning, which wants the Prime Minister – except for an excellent unexpected – to announce ‘Package’ of tax reduction reduction Next September, under consideration is the “scissors” of the tax on rental income.

The dominant scenario of changes in real estate income taxation, which has been put on the table at Niki Street headquarters, provides for a reduction in the minimum tax rate from 15% to 5% or 7% For annual taxable income from real estate up to 5,000 euros.

“Haircut” even 500 € in tax from rents

This reduction, if it is adopted and legislated, will not only apply to those who have taxable income from rents of up to 5,000 euros, but all the owners of the leased real estate as it is affected the tax of the entire scale of rates: Indeed, it is expected to be a “scissors” in the tax that may reach up to 500 euros a year.

How are rentals taxed today

Today, income from real estate exploitation, namely rents, are taxed independently on the basis of rates scale of 15% to 45%.

Specifically:

  • Annual taxable income from real estate up to 12,000 euros, taxed from the first euro at a rate of 15%. The maximum tax amount for this income step reaches EUR 1,800 (EUR 12,000 X 15% = 1,800 euros). So if it is adopted in the “part” of income up to 5,000 euros of 5%, instead of a tax of EUR 750, the debtor will pay 250 euros, ie 500 euros. Thus, the maximum tax amount will be reduced to the step from 1,800 euros to 1,300.
  • Annual taxable income from real estate between 12,000.01 euros and EUR 35,000, taxed at 15% for the first 12,000 euros and 35% for the next 23,000 euros, ie for the income section from 12,000.01 to 35,000 euros. As a result, the maximum tax amount for the income of this step is EUR 9,850 (EUR 12,000 X 15% + 23,000 euros X 35% = EUR 9,850).
  • Annual real estate incomes of over 35,000 euros are taxed with 15% for the first 12,000 euros, with 35% for the next 23,000 euros and with 45% for the excessive amount, beyond EUR 35,000.

The 5% discount on rent income

It should be noted here that the aforementioned scales do not include 100% of rental income, but 95%, as, for each landlord owner, applicable law provides ‘Automatic’ 5% Discount as an expense of repair and maintenance of the property.

The 5% discount does not require supporting documents, but is automatically calculated when clearing the tax return and calculating income tax.