Our company frequently receives inquiries from clients who need help with transaction documentation.
We examine the situation, verify documents, communicate with transaction participants, and then begin the process.
Over the years, we have noticed that there are certain "unfortunate oversights" that occur regularly.
Therefore, we offer you a "checklist" of four items that you should verify if you are selling real estate.
1) Property layout.
Each property has an "inventory file" (new name - "cadastral survey file"). This document contains technical parameters.
For example, for an apartment, the total area, the area of each room, and an attached plan will be indicated.
Does this plan match the actual situation? Were there any alterations or renovations?
If there were renovations, even minor ones, they must be "legalized". That is, you must order documents from an architect, agree on the changes with the construction authority, and order a new cadastral survey file.
What are the risks here? In case of unapproved alterations, the buyer may be denied a mortgage. The property appraiser will note this, and the bank will deny the mortgage.
2) Spouse's consent.
If the seller is married, most often a notarized consent from the "other half" for the sale of the property will be required.
On the buyer's side, if a mortgage is being arranged, the consent of the "other half" will also be needed to encumber the property.
What are the risks here? For example, if the spouse is abroad, the transaction cannot be registered until consent is obtained.
A possible solution in this situation is to obtain consent in another country, Apostille it, and send it to Latvia.
3) Income tax on proceeds from the sale of real estate.
Latvia has a very complex tax system. In rare cases, the sale amount is not subject to tax.
However, most often, you must pay 20% on the difference if you sell real estate for more than you bought it and have lived in it for less than 5 years.
In any case, after the transaction, you should prepare and submit a tax declaration.
What are the risks here? You may count on a certain amount that you will receive after the sale of the property. But after paying the tax, this amount will be significantly reduced.
Be sure to consult with a tax advisor before the transaction begins!
4) Real estate tax.
For each real estate property, you must pay "real estate tax" annually. This tax is paid quarterly, four times a year, or in one lump sum payment.
If you are selling the property in January, it may seem logical to pay the tax only for the first quarter. But by law, you must pay for the ENTIRE YEAR.
Responsibility for paying the tax for the current year falls on the seller. You can agree that the buyer will compensate for part of the tax.
But you should agree on this before the transaction begins, so it doesn't become an unpleasant surprise.
What are the risks here? Just as in the previous point - you may count on a certain amount that you will receive after the sale of the property.
But after paying the real estate tax, this amount will be reduced.
If you wish to purchase a quality real estate property, and individual attention is important to you, if you want to communicate with a real estate agent and lawyer in your native language, contact our company KOM-INVEST! We will be happy to select a suitable property, answer all your questions, draw your attention to important details, complete the transaction, arrange your residence permit, and manage your real estate.
For more detailed information about obtaining a residence permit in Latvia, see here in different sections.
Have questions? We look forward to your email or call!
Phone number: +371 29774775
Email: info@kominvest.com
Skype: KOM-INVEST