Greek property groups up in arms over capital gains tax

Two Greek construction and property groups said Wednesday that a capital gains tax expected to come into effect next year will weigh heavily on the real estate market struggling under the weight of the country's crisis.

Under instructions from international creditors - eurozone nations and the International Monetary Fund - Greece is believed to lift a multi year freeze on a capital gains tax on property in January, according to industry sources. The Greek government has yet to make a formal announcement on the issue.

The levy will be a 15% tax on the difference between the property's buying and selling price and will be paid by the seller, industry sources say. There will be a tax free threshold of up to 25,000 euros for assets that have been held for more than 5 years, while, properties purchased prior to 1995, will be exempt from the capital gains tax.

Greece's Real Estate Investment and Development Association (REIDA) and the Association for the Quality of Development of Constructions (SEPAK) said in a joint statement that the tax "will pull the brake on the sector at a time when it is seriously ill, to everyone's detriment."

Prices in Greece's real estate market have plummeted by more than 40% during the country's eight year economic downturn with deals in the sector having largely seized up amidst a credit freeze imposed by the country's banks and a sharp drop in disposable income levels.