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Monday 25.06.2018 | Name days: Maiga, Milija

Ignorance about real estate valuation system

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State Secretary of Ministry of Justice Martins Lazdovskis

Neither State Land Service nor the Ministry of Justice (MJ) have succeeded in explaining comprehensibly and clearly real estate valuation system to the tax payers, who are left ignorant about how the state has calculated the value of their property, considers the state Secretary of the MJ Martins Lazdovskis (Mārtiņš Lazdovskis).

Currently, along with the property market value fall, the cadastral value is also decreasing the second year in a row; however the real estate cadastral value differences as well as the ones in the market value are great in the country. While there is such disparity, the tax rates of the current market situation applied in the region of Ludza and Saka are unlikely to be granted also in Riga and Jurmala, Lazdovskis informed Latvijas Avīze.

Who could know better the condition of the territory than the local government itself? If local governments have the right to collect the tax, they should also be allowed to determine the appropriate tax rate. Germany and other European countries already practice this, tells Lazdovskis, rejecting the possibility of friends and business partners being granted lower tax rates.

Sure, we can debate endlessly whether and to what extent the cadastral value should be reduced or increased. But, in my opinion, what should be cristal clear is the amount of sum, which the state intends to get from people in a form of taxes for their land and houses. If the cadastral value is cut, then in order to collect the planned sum from taxes – the real estate property tax rate will have to be increased. Considering that we are planning to rise the residential property tax from 0.1 to 1.5% or 15 times, it should be clear that we cannot adjust the cadastral value to the rates to and from all the time!

When asked what the national cadastral valuation system should be like, Lazdovskis indicates that there only two systems are possible. The first one – administrative determination of the cadastral value separating them from fluctuations of the real estate market. The second – to improve the already established cadastral evaluation system, which still has drawbacks.

Even investing one, two or three million lats in the system development, fast radical changes still cannot be expected. Using all available data, the State Land Service has already cut the real estate cadastral base value by 25% for the coming year. This was done in the areas that had experienced the largest drop in market prices in the state, reducing them by 8%. Lazdovskis emphasizes that one should be aware that in the remaining months of the year is not possible to figure out and launch already from January 1 of 2011 a completely new system and new cadastral values for about 3 million immovable properties.


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