Property Taxes

Upon purchasing real estate, every owner automatically becomes a payer of real estate tax.

To understand how this tax is calculated and paid, KOM-INVEST has compiled frequently asked questions and prepared answers to them.

For information about real estate tax payment features for people holding a residence permit in Latvia in 2020, see this article.

1) What properties are subject to tax?

• Tax is levied on apartments, parts of apartment buildings, ancillary premises (for example, storage rooms in apartment buildings), garages and underground parking lots, land plots or parts of land, and commercial properties.

For example, you own an apartment. According to Latvian law, in addition to the apartment, you will also own shares of the building in which the apartment is located (which gives you the right to use the entrance and common areas), as well as shares of the land under the apartment building in which the apartment is located.

If you own an apartment in a new project, you will likely also own a parking space in an underground parking lot, or a parking space in a ground-level parking lot.

Accordingly, each such property, and not just the apartment, is subject to real estate tax.

2) How is real estate tax calculated?

• One of Latvia's state institutions, called the "State Land Service," annually calculates for each Latvian real estate property the so-called "cadastral value."

• Cadastral value is calculated in order to then calculate real estate tax based on this value.

• In most cases, the cadastral value of a property is lower than its market value.

The cadastral value of each real estate property can be found on the official website of the «State Land Service».

Thus, the basis for tax calculation is not the market value of the property or the purchase price, but the "cadastral value," which is set by the state.

3) What is the tax rate?

The local government, on whose territory the real estate property is located, has the right to set the tax rate in the range of from 0.2% to 1.5% of the cadastral value of the property.

If the local government has not set its own real estate tax rates, it must set the following rates, which are regulated by the state:

• For land and parts of land:

1.5% of its cadastral value.

• For an apartment, ancillary premises, and parking (garage) in an apartment building:

0.2% of the cadastral value, if it does not exceed €56,914.

0.4% of the cadastral value, if it is in the range of €56,915 - €106,715.

0.6% of the cadastral value, if it exceeds €106,715.

On average, the amount for a standard apartment (2-4 rooms), including parts of the apartment building and land shares, is €100-500 per year.

• For a private house:

0.2% of the cadastral value, if it does not exceed €56,914.

0.4% of the cadastral value, if the cadastral value of the property is €56,915 - €106,715.

0.6% of the cadastral value, if the cadastral value of the property exceeds €106,715.

• For commercial properties, buildings, houses with the status of "guest house":

1.5% of the cadastral value of the property.

For information on changes to the real estate tax rate in Riga from January 1, 2016, read here.

4) How do I get a payment receipt for the tax?

• The local government calculates the amount of real estate tax each year. At the beginning of each year (January - February), the local government sends a payment notice to each owner of the real estate property at the registered address, i.e., the mailman puts the tax payment receipt in the mailbox of the apartment or house that you own.

• If the property belongs to a foreigner, the payment notice will be sent abroad, to the address where the foreigner is registered. Of course, in such a case, there is a high probability that the payment notice will not be received, and the tax will not be paid.

Therefore, we recommend contacting the local government to submit a request to send the payment notice electronically, to the owner's email address. The local government offers such a service and sends the payment notice by email.

4) How is real estate tax paid?

• After receiving the payment notice, real estate tax can be paid in four quarterly installments.

• KOM-INVEST draws the attention of its clients to the fact that failure to pay real estate tax can have negative consequences. In particular, the local government has the right to collect the tax by appealing to court and demanding the sale of the debtor's real estate property at a public auction in order to cover the debt with the proceeds from the sale.

In the interests of its clients, KOM-INVEST always helps its clients register their email address with the local government after purchasing real estate, so that the payment notice is received by email. KOM-INVEST also annually reminds its clients about tax payment and explains how to pay it correctly.

The source of data in this article is the website of the Ministry of Finance of the Republic of Latvia.