Depending on a residential property's cadastral value, its tax could increase as much as 13 times from the current 0.3% top level.

RIGA — The Latvian Ministry of Finance is considering three options for real estate taxes recommended by the government’s primary creditor, the International Monetary Fund.

Currently residential real estate is annually taxed by the national government at a progressive rate of 0.1-0.3 percent of its cadastral value. Real estate with assessed value between 45,000 lats-75,000 lats (€64,000-€107,000) would be subjected to 0.2 percent tax. For property valued above 75,000 lats the tax rate would be 0.3 percent. Nonresidential property is taxed at a flat rate of 1.5 percent of cadastral value annually. The current proposals will increase the tax rate considerably for differing segments of the residential real estate market.

According to the finance ministry, the first option bumps the residential rate up to the regular rate of 1.5 percent and would include a tax credit for homes with a cadastral value of less than 5,00o lats (€7,000) but increase taxes 6 to 13 times for higher-valued homes. The second option decreases the base rate to a flat rate of 1 percent of cadastral value. The third option would create a range of 0.5 percent to 2 percent of cadastral value, with homes worth less than 10,000 lats at the 0.5 percent and homes valued at more than 40,000 lats (€56,500) at the 2 percent level.

The IMF estimates that this could bring 60 million lats (€84.7 million) in additional revenue. Latvia needs to make up 441 million lats (€630 million) in revenue or cuts to keep next year’s budget under the 6 percent threshold stipulated by the international creditors that bailed the Baltic state out in 2008.

— Baltic Reports reporter Didzis Melbiksis contributed to this article.