Nowadays, several investors are looking for alternative forms of investing their funds in order to secure and increase their profit, resulting to an increased investment interest to all categories of real estate.
The most common dilemma faced by investors has to do with what kind of real estate to invest their funds. Apartments, offices, hotels, shops and plots are the products that are offered for investment in the real estate market with special features and each one should in every case be considered thoughtfully by the investor, depending of course on the risk he accepts to handle and the capital he has to offer.
Examples of investment property:
It is important to emphasize that real estate is a form of investment with stable returns without high risk and ideally should be combined with both future surplus value and stable income. Plots are usually the real estate investment that offers high surplus value, where investors usually choose to build homes, offices, shops or hotel units.
Owners of real estate in Greece are divided into two categories with different tax treatment:
Individual: the property belongs directly to an individual for ownership, exploitation or investment.
Legal entity: the property belongs to companies for ownership, exploitation, investment, construction or rebuilding.
The income resulting from the rental or concession of real estate is taxed with the following rates
The owner of a sole proprietorship when he/she also has real estate income does not affect the above tax treatment for property income, hence it remains as income from real estate rather than income from business activity. When the individual enterprise has the object of commercial exploitation, development and investment in real estate, it is subject to income tax at a rate
that is, income from business activity and not income from real estate exploitation.
B. Legal entities
Legal entities in Greece are taxed on their income both domestically and abroad. Foreign companies in Greece are taxed only on the basis of income derived in Greece. The corporate tax rate is 28% for all earnings from business activity. Rentals received from property are also considered as profits from a business. Dividends and other distributed profits by a Greek company are subject to withholding tax at a rate of 10%.
Regarding the holding of shares and shares of foreign companies, income tax exemption is granted for intra-group dividends received or distributed by a legal entity resident in Greece, provided that the following conditions are met:
For real estate investments, it is preferable to choose an investment through a legal entity, mainly for tax purposes and facilitation and development of the business and investment activity. The two most prevalent ways of acquiring real estate are the following
The acquisition of shares / shares of a legal entity is more often used as it allows faster and easier ownership change, while providing a quick exit strategy for the buyer when he eventually wants to transfer the property. In addition, another important advantage is that companies owning real estate for commercial purposes (exploitation, development, investment) have the right to deduct from their total income of expenses, such as ENFIA, other operating expenses related to real estate, the amount of insurance contributions of the manager, etc. In addition, depreciation on the value of buildings is calculated and deducted from the total income. All these discounts result in a significant reduction in the taxable income of the company, the possibilities and advantages that are not granted to individuals. The corporate types that are most suitable for the occupation and exploitation of real estate are the SA and the Private Companies.
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