Compared to Lithuania and Estonia, the property tax for residents of Latvia has been and remains the highest, writes Latvijas Avīze.
While neighboring countries have implemented reforms to reduce the tax burden, Latvia continues to improve its tax policy and cadastral valuation - without changes and significant relief for residents and taxpayers.
Of course, there are many similarities in the application of property tax in Latvia, Lithuania, and Estonia. In all these countries, land is taxed, and both individuals and legal entities pay the tax. The tax is calculated based on changes in the real estate market. However, there are also significant differences. The tax is paid for both land and buildings only in Latvia and Lithuania. In Estonia, buildings and structures are not taxed. Additionally, there is no tax on land used for residential development in cities, up to 1,500 square meters, and in rural areas, for plots of land up to two hectares.
In Latvia and Estonia, the calculation of property tax is based on cadastral value. From January 1, 2025, Latvia will have two cadastral values for real estate - fiscal and universal, which makes tax bills even more confusing for residents. The fiscal cadastral value is used for property tax payment, while the universal value is used for calculating the so-called forced rent.
From January 1, 2026, tax calculations in Lithuania will be based on the market value of real estate, which is radically different from the tax policies of Latvia and Estonia. Furthermore, in Lithuania, property tax is not levied on housing where owners have indicated their permanent residence and whose market value does not exceed 450,000 euros. Conversely, if, in addition to the housing where the owner has indicated their permanent residence, they have several other properties, the tax rate ranges from 0.2% to 1% of the market value of the property.
In recent years, residents of Latvia have repeatedly attempted to achieve changes in property taxation policy. The civil initiative portal "Manabalss.lv" clearly expressed the demand to exempt the only property owned by a person from property tax; however, the Ministry of Finance has always rejected this proposal. There are several reasons, including the fact that about 80 percent of taxpayers owning property have only one residence, and abolishing the tax would sharply reduce the income of municipalities.
