Financial Services, Latvia, Real Estate, Taxation

The predicted additional revenue from this tax increase would be LVL 115 million a year, writes LETA.

As reported, the current tax for one- and two-household homes is 0.1% of the assessed value, if that does not exceed LVL 40,000, with a 0.2% tax applying to property with an assessed value of between LVL 40,000 and LVL 75,000, and a rate of 0.3% applying to property with an assessed value exceeding LVL 75,000.

According to the newspaper's source, which has information on the progress of negotiations with the international lenders, Latvia is being insistently recommended to introduce a unitary property tax of around 1.5% from next year, with some possible reductions.

Two other possibilities are being discussed – increases to 1% or to 1.3%. In these scenarios, the state would receive an increased income of LVL 111 million or LVL 113 million respectively.

The possibility is also being discussed of introducing a progressive rate: 0.5% for property whose worth does not exceed LVL 10,000, one% for a worth of between LVL 10,000 to LVL 20,000, 1.5% where the value is from LVL 20,000 to LVL 40,000, and two% if the value is in excess of LVL 40,000. This solution would allow the state treasury to earn an additional LVL 113 million. A second possible progressive tax structure foresees the levels being set at 0.75%, 1.25%, 1.75%, and 2.25%.