Greece’s 3-year rent tax exemption: Extension and expansion on the table

With housing costs continuing to rise and finding affordable accommodation becoming an ordeal for thousands of households, the government is considering extending or even broadening its tax-free rental income scheme for three years, which is set to expire at the end of the year.

Tax-free rental income: What new incentives is the government considering for property owners?

Although the full effectiveness of the measure has not yet been assessed in terms of how many properties have returned to the long-term rental market, sources from the economic team believe that the three-year income tax exemption on rental income can serve as a significant incentive for landlords.

On the table are proposals to maintain the tax exemption beyond the end of 2026, as well as to strengthen incentives in order to attract a larger number of property owners. Among the scenarios under consideration are reducing the required vacancy period from 3 to 2 years, including more property categories under the favorable scheme, and introducing a gradual tax reduction after the three-year period ends, so that more landlords can benefit.

Examples: The financial benefit for those renting out vacant or Airbnb properties

Currently, taxpayers who make vacant properties available for long-term rental as a primary residence, as well as those converting properties from short-term to long-term leases, are fully exempt from income tax on the rental income they receive for a period of three years. For example, a landlord who puts a previously vacant property on the long-term rental market and charges €850 per month generates an annual rental income of €10,200.

Based on the current tax rate of 15% for the first €12,000 of rental income, the tax that would normally be due amounts to €1,530 per year. Thanks to the tax exemption, the total benefit for the landlord over three years reaches €4,590, not counting any additional tax burden that may arise from higher tax brackets in the case of larger rental incomes.

Another landlord who converts a property from a short-term to a long-term lease and rents it out for €1,000 per month earns an annual rental income of €12,000. Under normal circumstances, they would pay €1,800 in tax per year, based on the 15% rate applicable to that income bracket — however, the three-year tax exemption translates into a total benefit of €5,400.

Eligibility requirements for the three-year rental tax exemption

However, specific conditions must be met in order to qualify for the exemption. More specifically, the property must have been vacant or available for short-term rental for at least three years prior to the signing of the new lease agreement. Additionally, its surface area must not exceed 120 sq.m. — a limit that increases by 20 sq.m. for each additional child when the tenant has more than two children. Furthermore, the lease must have a minimum duration of three years.

In the event of early termination by the tenant, the tax exemption is retained until the three-year period is completed, provided that the landlord enters into a new primary residence lease of at least three years’ duration within three months. If the second lease is also terminated before the three-year period is complete, the exemption benefit is forfeited.

Why increasing the supply of long-term rental housing is considered critical for the market

Final decisions are expected to be announced next month and are set to be included in the broader package of measures addressing the housing crisis, which the Prime Minister is expected to unveil at the Thessaloniki International Fair. According to informed sources, however, the housing burden has increased significantly, with a growing number of households being forced to allocate a disproportionately large share of their income to cover housing costs.

Indicatively, according to the latest Eurostat data, the average tenant in Greece now spends more than 35% of their income on rent, compared to the corresponding European average of 19.2%. In practice, this means that for thousands of workers, rent consumes nearly half their salary, leaving little room for food, transportation, or savings.

Increasing the supply of properties available for long-term rental is considered by the economic team to be a critical factor in easing market pressures and stabilizing prices — particularly in major urban centers and in areas with high tourist activity.

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