The rationale is to introduce stronger tax exemptions for long-term real estate rentals, i.e. traditional month-to-month rentals, and at the same time an increase in income taxation for short-term rentals, i.e. Airbnb-type properties, in order to pressure owners to change “camp” and increase the offer on traditional rents.
Among the measures being considered to combat the housing crisis is the introduction of a new scale for taxing rental income with higher rates for those from short-term rentals and lower rates for income from long-term rentals.
It is reminded that if it comes, which will probably come in September, it will be the second increase in the tax burden for short-term rentals, within 1.5 years. Where last year we had perhaps the most favorable tax regime and thousands invested their fortune in such a property and many proceeded with renovations with significant bank loans, now they see that they have the state against them.
Now the scale is uniform and rental income is taxed from the first euro at a rate of 15%, as long as it does not exceed 12,000 euros. For the highest income brackets, rates of 35% – 45% are applied, namely 35% for the bracket of income from 12,001 to 35,000 euros and 45% for the bracket of income above 35,001 euros.
Rental income is close to €6.5 billion a year, with almost eight in ten reporting an annual income of up to €5,000 and 14% reporting incomes between €5,000 and €10,000, resulting in 9 in 10 property owners declaring annual rental income of less than 10,000 euros.
At the same time, many property owners on the short-term rental platforms (Airbnb, Booking, VRBO) declare annual rental income below 12,000 euros, so that the rate does not rise above 15%.
The government is now trying to solve the puzzle of fairer taxation and the preferred intervention is the increase of the lowest rate to 22% for short-term leases and a reduction to 7.5% for long-term leases for the section up to 12,000 euros and in 17.5% from 12,001 to 35,000 euros.
Other proposals call for the reinstatement of tax credits for first home rent and interest on mortgages, two measures seen as key to tackling the rapid rise in housing costs. This is expected to be the first part of the tax interventions.
At the same time, it is considered certain that there will be restrictions on the lease time. The scenario is qualified to enter a “cutter” at 90 days per calendar year and for islands with less than 10,000 inhabitants at 60 days. What seems likely to hurt landlords who have invested in these leases the most is the ban on short-term letting of more than two properties per VAT number. In this case, those who operate at least two properties and not three, as now, will be treated as entrepreneurs who will be subject to VAT and pay insurance contributions.
THE FIRST SEMESTER OF 2024
Over 340 million euros in taxes from real estate transfers
More than €340 million was collected in the first half of 2024 from property transfer taxes, according to data submitted to AADE’s myProperty platform, with a steady upward trajectory for parental benefits and donations due to the high tax-free threshold of €800,000. More than 20,000 properties of all categories (apartments, detached houses, plots, commercial properties, plots of land) changed hands through sales in the first half of the year, with a total value of more than 1.7 billion euros. The average value of the properties transferred amounts to 84,909 euros.
At the same time, since the beginning of the year, the following have been submitted to the AADE platform:
– More than 122,000 transfer tax returns relating to real estate sales, with confirmed transfer tax amounting to €340 million.
– 55,800 parental benefit tax declarations, with the tax amounting to 7.3 million euros.
– 35,066 donation declarations, in which a tax of 75 million euros was assessed.
– 62,000 electronic inheritance tax declarations, with a tax of 66 million euros.
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