When selling property in Greece, various costs can be deducted from your capital gains tax liability, including the original purchase price, legal fees, notary costs, estate agent commissions, and qualifying improvement expenses. These allowable deductions significantly reduce your taxable capital gain, making proper documentation and understanding of eligible costs essential for minimising your tax burden when selling your Greek property.
Understanding capital gains tax deductions on property sales
Capital gains tax in Greece applies when you sell property for more than you originally paid for it. The taxable amount is calculated by subtracting your total allowable costs from the sale price.
For foreign property owners, understanding these deductions is crucial when selling your home in Greece. The Greek tax system allows various legitimate expenses to be offset against your capital gain, potentially saving thousands of euros in tax liability.
The key principle is that costs directly related to acquiring, improving, or disposing of the property can typically be deducted. This includes both the original purchase expenses and subsequent costs that add lasting value to the property.
What costs can be deducted from capital gains tax on property?
The primary deductible costs include your original purchase price, all legal and professional fees from both buying and selling, notary costs, transfer taxes, and qualifying improvement expenses that enhance the property’s value.
Your original purchase costs form the largest deduction and include the property price, legal fees paid to lawyers, notary charges, transfer taxes, surveyor fees, and estate agent commissions from when you bought the property.
Additional deductible expenses encompass:
- Municipal taxes and stamp duties
- Property registration fees
- Translation costs for legal documents
- Structural surveys and building inspections
- Bank charges related to the property transaction
When selling, similar professional costs can be deducted, including marketing expenses, legal representation, and estate agent fees.
Can renovation and improvement costs be deducted from capital gains tax?
Yes, capital improvements that permanently enhance your property’s value are fully deductible from capital gains tax. However, routine maintenance and repairs cannot be deducted as they merely maintain the property’s existing condition.
Qualifying improvements include extensions, new bathrooms or kitchens, swimming pools, central heating systems, new roofing, and structural alterations. These must add lasting value rather than simply restore the property to its previous condition.
Non-deductible expenses include regular maintenance such as painting, minor repairs, garden upkeep, appliance servicing, and temporary fixtures. The distinction lies in whether the expense creates lasting added value or merely maintains existing standards.
Documentation is vital for improvement claims. Keep all invoices, building permits, architect plans, and contractor agreements. The Greek tax authorities may request proof that improvements were properly authorised and completed to building standards.
Are legal and professional fees deductible from property capital gains?
All legitimate professional fees incurred during both the purchase and sale of your property are deductible from capital gains tax. This includes lawyer fees, notary costs, surveyor expenses, and estate agent commissions.
Deductible professional services encompass legal representation throughout the transaction, notarial services for document authentication and registration, property valuations and surveys, estate agent fees and marketing costs, and tax advisory services related to the sale.
Translation services for legal documents, power of attorney arrangements, and property management fees during the sale process also qualify as deductible expenses.
How do you calculate capital gains tax after deductions?
Calculate your capital gains tax by subtracting all allowable deductions from your sale price to determine the taxable gain, then apply the appropriate tax rate based on your ownership period and residency status.
The calculation follows this structure: Sale Price minus Original Purchase Price minus Purchase Costs minus Improvement Costs minus Sale Costs equals Taxable Capital Gain.
Greek capital gains tax rates vary depending on how long you owned the property. Properties held for longer periods may qualify for reduced rates or exemptions, particularly if you’re a Greek tax resident.
For example, if you sold a property for €400,000, originally bought it for €250,000, spent €30,000 on improvements, and incurred €15,000 in total legal and professional fees, your taxable gain would be €105,000 (€400,000 – €250,000 – €30,000 – €15,000).
What documentation is required for capital gains tax deductions?
You must maintain comprehensive records including original purchase contracts, all receipts and invoices for improvements and professional fees, bank statements showing payments, and official permits for any building work undertaken.
Essential documentation includes the original purchase agreement and notarial deed, all legal and notary fee receipts, transfer tax payment confirmations, improvement work invoices with building permits, estate agent commission agreements, and bank transfer records for all payments.
For improvement work, keep architect plans, building permits, contractor invoices, material purchase receipts, and completion certificates. Professional fee documentation should include detailed invoices showing services provided and VAT where applicable.
Organise documents chronologically and maintain both physical and digital copies. The Greek tax authorities may request this documentation during assessment, and missing records could result in disallowed deductions.
Key takeaways for maximising capital gains tax deductions on property
Maximising your capital gains tax deductions requires meticulous record-keeping from the moment you purchase your property. Keep all receipts for legitimate improvements and professional services, as these significantly reduce your tax liability when selling.
The most valuable deductions typically include your original purchase costs, major improvements like renovations or extensions, and all professional fees from both buying and selling. Understanding the difference between capital improvements and routine maintenance ensures you claim appropriate deductions.
Professional guidance proves invaluable when navigating Greek tax regulations, particularly for foreign property owners unfamiliar with local requirements. Proper documentation and expert advice can save substantial amounts in capital gains tax.
For personalised assistance with your property sale and tax obligations, professional support ensures compliance whilst maximising legitimate deductions. Consider reaching out for us via the contact page.
