How much does it cost to buy and own real estate in Latvia?
October 18, 2021
The cost of acquisition of real estate is not limited to the price of the property itself. In this article we have compiled general information which may help prospective buyers understand the costs of buying and owning immovable property in Latvia.
1. ACQUISITION COSTSThe total costs related to the acquisition of real estate may be divided into three parts:
- state fees for the registration of ownership right with the Land Register;
- notary fees;
- bank charges.
State fee for ownership registration
- State fee for the transfer of real estate ownership – 1.5% of the value of the real estate (it may be less in some cases);
- Registry charge (including for the issue of paper format ownership certificate) - 21,34 EUR;
- If the buyer uses a mortgage to buy property, a mortgage registration state fee may be applicable – 0.1% of the loan amount.
Notary feesThe change of ownership from the seller to the buyer shall be registered with the Land Register. For that purpose both parties have to address a notary public in Latvia who will draw up a Request for Corroboration for the Land Register. This is usually done at the same time as signing of the purchase contract. Signatures of the parties on the Request for Corroboration have to be notarized. Notary’s fees in this case will amount to average 70-90 EUR, but may be more depending on the circumstances. The Request for Corroboration then needs to be submitted to the Land Register together with the purchase contract and other documents.
- escrow (transaction) account – 0.4% of the purchase price;
- property appraisal – 100-200 EUR;
- bank commission fee for issuing a loan – 1-1.5% of the loan amount.
2. COST OF OWNERSHIPOwning real estate in Latvia comes with a number of costs and expenses, and namely:
- Immovable property tax;
- Insurance (optional).
Immovable property taxEvery owner of real estate in Latvia is required to pay Immovable property tax annually. The Immovable property tax is tied to the so called cadastral value of the property. The cadastral value is determined in respect of each property by the government and is used mainly for taxation purposes.
According to the law, real estate owners shall be taxed annually at the following rates:
- Land – 1.5% of the cadastral value;
- Residential property – 0.2-0.6% of the cadastral value, if at least one natural person (a citizen of EU, EEA, Switzerland or a holder of a Latvian permanent residence permit) has registered his/her place of residence at the property in question. Otherwise, the tax rate is 1.5% of the cadastral value.
Worth noting that municipalities are allowed to provide tax reliefs to its residents. For example, in Riga a family with 1-3 children can get a tax relief reducing the payable tax by 50-90% (depending on the number of children). There are also other tax reliefs provided by the municipalities with respect to the Immovable property tax.
Utilities and maintenanceSpeaking of a 70-100 sq.m. apartment in Riga the utilities (heating, gas, water, sewerage, electricity, etc.) and maintenance costs may amount to 150-350 EUR on average, but that, of course, depends on a number of circumstances, such as location, age of a building, number of residents, etc. New buildings usually come with higher maintenance and management costs.
Real estate insuranceInsurance costs are various depending on the parameters of real estate.
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Belyaev & Belyaev is a full service Latvian law firm also specializing in the area of real estate law with experience in performing real estate transactions of different complexity. If you require help with real estate purchase or sale, please feel free to contact our firm through the form below or by email.
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