At law courts throughout Greece, people are lining up to file papers renouncing their inheritance. They are turning their backs on what used to be a pillar of Greece’s economy and society i.e. real estate. Growing personal debt, declining incomes and ever higher taxes as Greece’s depression grinds on have turned property and the dream of easy money into dread of a catastrophic burden. Many Greeks went from paying almost no taxes on real estate to not having enough money to pay.
Assets that once held or gained value now carry high costs of ownership and lose value.
- Governments desperate for tax revenues raise property taxes, which depresses sales and future price appreciation.
- High debt levels and high property taxes trigger foreclosures and forced sales that further depress the market with high inventories of unsold & unrented homes.
- As sales decline, appreciation can no longer be counted on to enrich owners. Instead, owners fear declines in value and higher taxes. This further depresses sales.
- High debt levels become even more burdensome as property values fall.
- Rather than offer a means of building and protecting wealth, real estate becomes a liability that destroys wealth via payment of taxes and declines in value.
Governments everywhere are facing fast-rising pension and healthcare costs, and the need for more tax revenues will skyrocket once the global recession trims income, payroll, business and sales taxes. Additional taxes on assets that can't flee the country i.e. real estate become extremely attractive.