Greece to Extend VAT Break on New Homes Through 2027 and May Scrap Capital Gains Tax

Why this matters now for real estate Greece buyers and investors

The Greek government is preparing to extend two tax measures that shape the economics of buying and selling property in Greece: the suspension of the 24% VAT on newly built homes and the suspension — possibly permanent removal — of the 15% capital gains tax on property transfers. For anyone tracking the real estate Greece market, these moves are immediate policy signals. They affect transaction costs, developer behaviour, and the attractiveness of new-builds versus second-hand housing.

We need to be blunt: extending the VAT suspension keeps prices effectively lower for buyers of new construction, while scrapping the capital gains tax would rewrite the after-tax returns for resellers and investors. Our analysis below looks at what the measures are, how they operate, who benefits, and what risks buyers and investors should weigh before making decisions.

What the proposed measures are and the timeline

The government’s economic team says it wants to maintain market momentum, support construction, and avoid adding costs for buyers and sellers while housing prices remain elevated.

Key details from the government statement and reporting:

• The VAT suspension applies to sales of newly built properties and is currently set to expire on 31 December 2026; the plan is to extend it through 2027.
• Under the existing exemption buyers of new builds pay a 3% property transfer tax based on the property’s taxable value rather than 24% VAT.
• The capital gains tax on property transfers is legislated at 15%, but implementation has been repeatedly suspended. Reports now say the suspension will be extended and the government is even considering permanent abolition of the tax.
• The final decisions are expected in the coming weeks and will be included in the tax package Prime Minister Kyriakos Mitsotakis will present at the Thessaloniki International Fair (TIF).

These are not minor tweaks. The VAT measure was first suspended in 2020 and has been extended multiple times. It applies to building permits issued from 2006 onwards, covering developer projects and properties built under Greece’s antiparochi (land-for-apartments) system. Developers must apply to the Independent Authority for Public Revenue (AADE) and the exemption covers unsold units linked to those permits.

How the VAT suspension changes buyer maths

The simplest way to see the VAT suspension’s effect is through an example the government has used repeatedly:

• On a newly built apartment with a market price of €200,000:
  • 24% VAT would add €48,000, taking the final price to €248,000.
  • Under the exemption, the buyer instead pays 3% property transfer tax of €6,000, bringing total cost to €206,000.

That’s a €42,000 gap in out-of-pocket cost between the two tax regimes. For buyers sensitive to mortgage lending limits, deposit size, and monthly repayments, that gap matters.

Practical consequences:

• Developers can market new-builds at lower headline pricing relative to what they would have to charge with VAT, keeping demand alive.
• Buyers face a lower initial cash requirement and lower loan-to-value stress tests in many cases.
• New-builds become more competitive against resale stock, shaping where developers and investors allocate capital.

We should be realistic: VAT is a blunt revenue tool and removing it shifts the tax burden away from consumption. That is pro-buyers and pro-development in the short term, but it also reduces tax receipts that might otherwise fund infrastructure or social housing — a trade-off the government appears willing to accept while prices remain high.

What scrapping the 15% capital gains tax would mean for sellers and investors

The capital gains tax targets the difference between sale and purchase price. Under the written law the tax rate is 15% on gains; however, implementation has been paused repeatedly, so in practice sellers have not had to account for it.

A simple example shows the impact:

• A property bought for €120,000 and sold later for €180,000 produces a €60,000 gain.
• At 15%, the tax bill would be €9,000.

If the government moves from suspension to permanent abolition, it would have several effects:

• Short-term increase in after-tax returns for speculative investors and flippers, improving potential internal rates of return on short holding periods.
• Reduced behavioural friction for investors considering sales, potentially increasing turnover on the secondary market.
• A stronger incentive structure for foreign buyers who compare tax regimes regionally.

However, abolition is not costless. It reduces state revenue and might encourage short-term trading that amplifies price volatility in urban hotspots. The government needs to balance market stimulation with fiscal and macroprudential stability.

Who benefits — and who should be cautious

The primary winners, if these measures are extended, are obvious:

• Buyers of newly built apartments benefit from the VAT suspension and lower upfront costs.
• Developers gain easier sales velocity and the ability to price more aggressively.
• Investors in the resale market would benefit if the 15% capital gains tax is permanently removed, improving net yields on short-to-medium-term sales.

But there are important caveats and risks for different groups:

Buyers

• Benefit from lower purchase costs for new builds, but must verify that the project’s building permit date is covered (permits issued from 2006 onwards).
• Need to confirm the developer has submitted the necessary application to AADE to secure the exemption for the specific unsold unit.
• Should not assume price declines simply because tax breaks exist; market prices reflect supply and demand and have been rising in many parts of Greece.

Developers

• Can use the tax break to move inventory faster and preserve margins, but longer-term project feasibility depends on construction costs, financing rates, and permitting timelines.

Investors

• Short-term investors may welcome a permanent abolition of capital gains tax, but should factor in the risk that other measures — such as higher transaction taxes or macroprudential constraints — could appear if turnover rises too quickly.

Regional differences

• Athens and other urban centres react differently to tax incentives than islands and resort markets, where seasonal dynamics and foreign-buyer patterns matter.

What buyers and investors should do now — practical checklist

We have tracked dozens of deals and investor conversations; here is what we advise.

• Confirm permit dates: ensure the building permit for the property was issued from 2006 onwards if you want the VAT exemption to apply.
• Ask for AADE documentation: developers must apply for the exemption and it applies only to unsold units tied to the relevant permit. Get written confirmation.
• Run the numbers both ways: calculate the purchase cost under 24% VAT and under 3% transfer tax, and factor this into your mortgage application, deposit planning, and yield calculations.
• If you plan to sell within a short horizon, model returns with and without the 15% capital gains tax — and consider tax advice if the government signals abolition.
• Consult a Greek tax or legal adviser before signing a reservation agreement; tax policy announcements matter, but only signed documents and permits protect your position.

These steps protect buyers against loose promises and ensure investors know the legal basis for the tax benefits they are assuming in their financial models.

Market implications and policy trade-offs

Extending VAT suspension and pausing or abolishing the capital gains tax is a clear policy choice that prioritises demand and construction activity. The government lists three goals: maintain housing market activity, support the construction industry, and avoid additional costs for buyers and sellers when prices are high.

Potential broader impacts include:

• Stimulated construction: Developers may be more willing to start new projects if demand remains solid and tax breaks keep sales turnover predictable.
• Price insulation: By lowering transaction costs for new homes, the measures might reduce downward pressure on new-build pricing even if demand softens.
• Fiscal cost: These exemptions carry a fiscal cost.