Law 5246/2025 titled “Tax Reform for Demographics and the Middle Class” has been published in the Government Gazette, introducing significant changes to property taxation and new incentives to boost the long-term rental market. Among other measures, the law includes a reduction in the rental income tax rate, ENFIA exemptions for small settlements, and the annual extension of the VAT suspension on new buildings. However, the most notable provision is Article 9, which establishes a full three-year tax exemption for income from leasing vacant or previously short-term rental properties.
A tax incentive aimed at revitalizing the housing market
The regulation stipulates that owners who offer for long-term lease properties up to 120 sq.m., which have been vacant for three years or previously rented short term (e.g., via Airbnb), will receive a full 36-month exemption from income tax on rental earnings. The goal is to immediately increase the availability of homes for primary residence and reduce the supply-demand gap that has pushed rents upward, especially in major cities.
Implementation is simple: no application or platform enrollment is required, nor are there income or asset criteria. Owners must simply file the lease agreement with the tax authority (AADE), following standard procedures. The exemption applies to leases concluded until December 31, 2026, and is retroactive for contracts signed since September 8, 2024.
Which owners qualify for the exemption
According to POMIDA, which actively contributed to shaping the measure, the exemption applies to:
- Homes up to 120 sq.m., increased by 20 sq.m. for each of the tenant’s children beyond the first two.
- Properties vacant for at least three consecutive years, as proven through tax forms E1 and E2.
- Homes that were legally operated as short-term rentals in the previous tax year, declared to AADE.
The exemption requires a primary-residence lease of at least three years. For specific categories of public employees (doctors, teachers, uniformed personnel), six-month leases are accepted, provided the property remains available for similar contracts.
What happens if the lease ends or is terminated
If the tenant leaves before the three-year period, the owner keeps the exemption as long as a new primary-residence lease is signed within three months. If the property remains vacant longer or returns to short-term rental use, the tax exemption is revoked retroactively, and the owner must repay the taxes on the exempted income.
Support for specific groups of workers
Special provisions apply to medical, nursing, teaching and uniformed staff, who often face housing shortages in the areas where they serve. For these groups, leases of at least six months do not jeopardize the tax exemption, provided the property is not used for short-term rentals.
POMIDA, however, expresses dissatisfaction that seasonal private-sector workers—particularly in tourism—were not included.
Practical clarifications and new parameters
POMIDA notes that the three-year vacancy period may include the time during which the property belonged to a previous owner, provided it was properly reported in tax filings. The measure also covers properties undergoing a change of use (such as old commercial spaces converted into residences) supporting the revitalization of urban housing stock.
Other tax interventions
Beyond the three-year exemption, the law includes:
- A reduction of the middle rental-income tax rate from 35% to 25%, the lowest since the bailout era.
- ENFIA exemptions for primary residences in small settlements.
- Extension of the VAT suspension on new builds until 2026, facilitating property transactions.
POMIDA’s stance
The Hellenic Property Federation expresses satisfaction that most of its proposals were adopted, calling the measure “truly workable and functional”. At the same time, it reiterates its longstanding demands for broader tax cuts and the reinstatement of a €6,000 tax-free threshold for rental income.
POMIDA urges all owners with vacant or short-term rental properties to return them to the long-term market and encourages tenants to accurately declare lease details to avoid fines or loss of income.
A targeted measure with dual benefits
The new tax framework is arguably the most substantial housing-market intervention in years: it incentivizes owners to bring idle or tourist-oriented properties back into long-term leasing, while simultaneously expanding the availability of affordable homes for households. Whether the measure succeeds will be seen in practice—but for the first time in decades, tax policy is explicitly aligned with strengthening social cohesion through housing.
