Parents who will give money, up to 150,000 euros, to their children to acquire a first home will not pay a single euro of tax to the tax authorities. After the three-year freeze on the 24% VAT on real estate, the Ministry of Finance is giving another tax bonus to support the real estate market, which is being hit by the pandemic crisis. With a provision of the new tax bill which was submitted to the Parliament at midnight last Friday, the 10% tax that is currently imposed independently on the parental provision of sums of money is abolished on the condition that the children will use the money donated by their parents for the purchase first residence. This specific measure frees parents from a significant tax cost and at the same time makes it easier for young people who proceed to purchase their first home to justify the "pothen esches", i.e. the origin of the money they have available for the purchase of the home.

Today, the parental provision of monetary amounts is taxed independently at a rate of 10% from the first euro. This means that a gift of €20,000 from a father to his daughter incurs a tax of €2,000, which is usually paid by the parent. With the new regulation, parental allowances of up to 150,000 euros that will be allocated for the acquisition of a first home are tax-free, while for amounts over 150,000 euros and up to 300,000 the tax is calculated at a rate of just 1%. In the specific example, the parental benefit of 20,000 euros will be tax-free and the parent, who usually bears the tax, will save 2,000 euros.

What applies

Based on the new setting:

1. For the calculation of the tax on monetary donations and parental benefits, recommended by parents to their children for the purchase of their first home, the scale of the Inheritance, Donations and Parental Benefits Taxation Code is applied, which provides for a tax-free limit of 150,000 euros. A tax of 1% is imposed on sums of money over 150,000 and up to 300,000 euros, a tax rate of 5% is applied on sums over 150,000 and up to 600,000 euros, while a tax of 10% is imposed on the part of the money that exceeds 600,000 euros.

2. A prerequisite for the favorable treatment of donations and parental benefits is that it appears that the donation or parental benefit is made for the acquisition of a property for which the children were granted the first residence exemption. In this way, as reported by the Ministry of Finance, monetary donations from parents to children, which are recommended for the purchase of a first home, are tax-free up to 150,000 euros and facilitate the acquisition, exclusively, of a first home, while at the same time giving impetus to building activity.

3. The abolition of independent taxation at a rate of 10% only concerns parental benefits for the acquisition of a first home by the children and not for the acquisition of other assets, e.g. car purchase.

4. The presumption of acquisition of the amount given as support from the parent to the child is maintained and should be justified by the parent's income.

With other provisions of the bill:

- An invitation is addressed to pensioners abroad to transfer their tax residence to Greece by paying a tax of only 7%.

– A new type of informal settlement is applied for the out-of-court settlement of tax cases pending in the courts.

– The tax advance is reduced by 30%-100% for businesses and professionals depending on the drop in turnover they recorded in the first half of the year.

– Exempted from the obligation to pay the registration fee are regular farmers, for whom the first five years have passed since the date of bookkeeping and their inclusion in the regular VAT regime.

– The terms and conditions for subsidizing up to 90% of loan installments with a mortgage on the first home are defined.

Source: in.gr