The tax on real estate in Latvia will increase by half

13.10.2010 20:30
This was stated by Prime Minister Valdis Dombrovskis. However, he denied rumors that the tax will increase by 15 times next year.<br /><br />The idea of increasing budget revenues by raising taxes on housing came from foreign lenders. Formally, it was of the nature of recommendations, but, in fact, was the requirement that the Latvian government must perform in order to recover billions of dollars in loans.<br /><br />From 1 January this year in Latvia came into force a new tax on real estate. For private and multi-family houses tax rate of 0,1% of the cadastral value of the property, if it does not exceed 40 thousand lats (€ 57 thousand), 0.2% at a cost of 40-75 thousand lats (€ 57-107 thousand) and 0.3% at a cost of more than 75 thousand lats.<br /><br />In the spring the Ministry of Finance has submitted three options to increase the tax on housing, which were quite radical. In all cases the rate was to rise from 0,1-0,3% to an average of 1-1,5%, and in some cases could reach 3%. However, the authorities were assured that all changes will be gradual, Telegraph newspaper writes.<br /><br />According to the economist and the deputy of the Latvian parliament Andris Vilks, the maximum tax rate may make next year 0,6-0,8% of the cadastral value of the object.<br /><br />One of the main problems of Latvian real estate tax is excessive inventory cost of housing in Jurmala and Riga. Note that these are the items attracting the most interest of Russians. In addition, the amount of tax on low-cost housing in the province are often so low that the cost of collecting the tax exceed the amount of income. Both problems will be solved soon, says Wilkes.<br /><br />Experts suggest that by 2012, a sort of compensation for the increase of property tax may be to reduce income taxes by 1-2% or increase the minimum wage.<br /><a href=""> </a><br />
Content tags: Overseas property
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