The Ministry of Finance, the Tax Department, and members of the House of Representatives’ Finance Committee are fully aligned on the need to improve provisions included in the tax reform bills, with the aim of completely addressing an injustice affecting borrowers.

Specifically, as Brief writes, the issue concerns borrowers whose primary residence is sold through foreclosure or transferred in settlement of a loan, yet who are still required to pay capital gains tax. The proposed changes seek to eliminate this burden entirely.

It is recalled that in 2016, following private members’ bills submitted by DISY and DIKO, legislation was passed providing this exemption to borrowers with non-performing loans as of 31 December 2015.

Under the existing framework, the law applies to primary residences valued at up to €350,000. Members of the Finance Committee are now expected to submit an amendment under which affected borrowers will be exempt from capital gains tax when their non-performing loans are restructured or settled.

Finance Minister Makis Keravnos has already accepted, during meetings with the four parliamentary parties—DISY, DIKO, EDEK and DIPA—the abolition of stamp duty fees.

In addition, the proposed amendment provides for the abolition of transfer fees, as well as exemptions from income tax.

Borrowers who settle their loans under the “debt-for-asset” arrangement will also be exempt from capital gains tax.

Christiana Erotokritou, Chair of the House Finance Committee, told Brief that the amendment enjoys unanimous support from all parliamentary parties and is expected to be approved by the plenary session without opposition.

Another significant amendment extends the value threshold of a primary residence eligible for capital gains tax exemption from €350,000 to €450,000.

It is also noted that several legislative proposals have been submitted to Parliament, including one by the Green Party dating back to 2024, seeking to extend the period during which tax relief measures apply to loan restructurings.

Currently, the market holds approximately €20 billion in non-performing loans, most of which are managed by credit-acquiring companies that purchased large portfolios of bad loans from almost the entire banking system.

This development played a decisive role in cleaning up banks’ balance sheets, reducing capital requirements imposed by supervisory authorities, stabilising the financial system, and returning it to profitability.

The amendment is among the items scheduled for discussion at the next meeting of the House Finance Committee, to be held on Monday.