The entry into force of the tax deductions earned by the owners who will throw in the market real estate for long-term rental or they will withdraw them from the platforms short term rental for the same purpose, marked the publication in the Official Gazette of the tax law passed a few days ago.
The three-year income tax exemption for landlords (eg those exiting short-term lettings) is being extended until 2026, while its scope is widening for those letting out homes that have been empty for at least 36 consecutive months. According to the regulation, the property must have been declared as “vacant” on the E1 and E2 returns for the three previous tax years before the contract was signed. The exemption applies to homes that were either vacant or previously available through a short-term rental, provided that the first long-term rental contract as a main residence is concluded by December 31, 2026, according to ertnews.
The regulation includes residential leases that have a date of signature or entry into force from 8.9.2024 and up to 31.12.2026. Therefore, the tax exemption is definitively lost for the rents from residences that until 31.12.2026 will not have completed the three-year vacancy or the annual availability for short-term rental.
In particular:
• The three-year exemption applies to owners who will rent homes that have been vacant for at least three years as well as homes that in previous years were for short-term rental, with a surface area of up to 120 sq.m. If the tenant has more than two children, for each additional child this limit will increase by 20 sq.m.
• Tenants will be required to enter into a three-year primary residence contract. If the tenant moves out of the residence, the exemption will continue until the completion of three years if within a quarter the owner enters into only one new three-year principal residence contract. If this lease is also terminated, the further tax exemption is also lost.
• The exemption will also apply exceptionally to leases of at least six months, for residences that will be leased “to medical or nursing staff employed by General Government bodies, teachers of all levels of public education, as well as to uniformed personnel of the Armed Forces and Security Forces. In this case, the owner will not lose the continuation of the tax exemption if, within six months, he enters into new rental contracts for the main residence, of at least six months or even three years.
• The exemption applies to residences of the aforementioned two categories, whose first of the rental contracts as a main residence will be concluded by December 31, 2026.
The conditions for dwellings that have been vacant for three years are:
• To have been declared on the E2 form of the income tax return as an “EMPTY” property or:
• That it has not been declared as a leased property, neither as the lessor’s main nor secondary residence, nor as self-use nor free property, in forms E1 and E2 of the income tax return during the last three financial years after the year of the (first) lease.
• A declaration of information on another lease of the property has not been submitted to the AADE during the year of the lease and during the year and until its commencement.
For short term rentals
Accordingly, the conditions for short-term rental housing are:
• The residence must have been legally and exclusively available for short-term rental during the tax year prior to the signing of the (first) lease.
• The concluded short-term leases must have been declared to the tax administration.
• To have submitted a short-term rental declaration during the year of the rental and until its commencement.
*The full exemption from personal income tax derived from residential rental will be valid for the period of the first 36 months after the month of entering into a lease of a residence that falls into the specified categories.
*The tax exemption ceases to apply and is lost for the lessor if within the three years of the lease the residence is vacated and not re-rented within three months. It is permanently lost if it is also vacated by the second tenant for the rest of the period.
*For leases to civil servants, unlimited leases of at least six months are allowed, and the deadline for re-leasing it (so as not to lose the exemption) is six months, after which the exemption is lost for the rest of the period.
*If the residence within the three years of its duration is made available for short-term rental, the exemption ceases to apply retroactively from the first year of the rental, in which case the issue of retroactive payment of income tax will be raised for all previously collected rents that were exempt from income tax.