By Sissis Stavropirakos
At the government table is the further reduction of taxation on rent income with the implementation of the intervention primarily dependent on the revenue generated by the statement of rents in this year's tax returns. The question of financial staff is not only to reduce the tax burden on owners, but also to limit tax evasion linked to undeclared or implied leases. If the state collects more than last year from the disclosure of hidden rents, this money will judge whether and how much tax rates will be reduced.
According to the recommendations under consideration, the new intervention will focus on smaller owners, especially those who gain income from rents up to 12,000 euros per year. This is the category that did not benefit substantially from the previous government intervention, which mainly concerned higher incomes. Today, for the income segment from 12,000 to 24,000 euros an intermediate tax rate of 25% is applied, instead of the previous 35%, leading to significant reliefs for several owners. However, for incomes up to EUR 12,000 the rate remains at 15%, without a corresponding reduction.
This is exactly what the government seems to be looking at now. One of the scenarios on the table predicts a reduction in the rate of income from rents up to 12,000 euros from 15% to 8%. Such a move would give a direct tax breath to small owners, who often have a limited net benefit from their properties, especially when costs of maintenance, repairs and other obligations are taken into account.
Intervention is directly linked to housing policy and the need to increase available housing on the market. The government estimates that a softer tax may act as an incentive for more owners to declare their actual income from rents, limit enrolment practices and dispose of properties that are currently closed or untapped.
The role of MIDA
A defining role in this plan is expected to play the activation of the MID. Its full implementation may allow for more targeted and strict controls, cross-checking data on real estate, leases and declared income. If the register works quickly and efficiently, the State will be able to identify undeclared or lower declared rents, increasing public revenue not through higher rates but through greater compliance.
Last year the average declared income from rents for main residence did not exceed 241 euros per month, while in the same period the declared income-making properties increased by 225,000. The scope of the new reduction will therefore be judged by whether additional revenue from tax compliance can create the necessary financial space. If the crossings pay off and undeclared leases are limited, then the government will have greater room to go further in reducing the tax.
In any case, intervention aims on the one hand, to ease small owners and, on the other hand, to increase the supply of housing on the market. At a time when housing pressure remains strong, the reduction in rent taxation is not only a tax measure, but as a tool for greater transparency, more available housing and possible wage restraint.
