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Monday 18.11.2019 | Name days: Doloresa, Aleksandrs

Real estate tax payment - problematic for 27% of families

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Almost one third or 27% of AS Swedbank Institute of Private Finances surveyed families admit that they are having difficulties in finding funds for real estate tax payment, the business portal was informed by Swedbank Institute of Private Finances director Ieva Use.

The poll shows that 56% of households have received government or the building management’s calculated real estate bill for living space. The rest of the families have not received the bill yet, while some of the respondents had not been informed about the bill at all.

Although the property tax was introduced at the beginning of this year, only one third of the respondents assert that they know how it is being calculated. After AS Swedbank Privātpersonu finanšu institūts estimates – only a few people really understand how the real tax payment is formed.

«It is important to understand the essence of how the tax is calculated for two reasons. Firstly, the residential tax rate might change the next year, therefore, it is necessary to know in advance what amount of its payment should be included in family budgets of 2011. Secondly, when receiving the bill of the current year, it is worth making sure that it has been calculated correctly and it will not be overpaid. If there is any doubt, clarifications from the local government should be requested,» explains Use.

When assessing residential tax impact on family budgets, 64% of the surveyed population indicate that they will be able to pay the housing tax from their monthly income this year.

However, a considerable part of the respondents are currently facing financial difficulties, as 14% point out that they still need to search for the money to pay the tax; while 13% have responded that they are not going to pay the tax, as they do not even have money enough for other payments. «Both of the answers are signaling the government to seriously evaluate future tax changes impact on low income people,» comments Use.

The survey on real estate tax was conducted on September 23 this year over the Internet; it includes 1000 respondents aged over 25.

The Institute of Private Finances is an independent part of Swedbank, it started to operate in late 2009. The aim of the Institute is to develop the personal finances management in Latvia, which would help the residents to realize how important it is to manage their own private finances.

It has already been reported that on June 17 this year the government adopted amendments in the law On Property Tax, which provides tax increase limit of 25% to be applied also next year. The amendments set that, this year and in 2011, after the real estate cadastral value updating, the amount of the property tax must not exceed previous fiscal year’s estimated tax amount for more than 25% (without taking into account the incentives). The only restriction is that this applies to real estates whose intended use has not changed separately for each unit of land and building.

Real estate tax increase limit is also applied to such real property tax objects as apartment houses, which consist of one type of living space and land that have been created anew as a result of privatization. In this case, the property tax increase limitation is applied on the basis of the previous fiscal year’s estimated tax on undistributed land unit under the jurisdiction of each individual apartment or non-residential space.

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