Budget, Financial Services, Good for Business, Investments, Latvia, Legislation, Real Estate

In the first half of 2013, the amount of taxes paid into the state budget by third-country residents who applied for temporary residence permits, as well as taxes paid by their or their family members' companies, reached about EUR 98 million. Municipality budgets have earned more than EUR 570,000 (0.5% of the total amount of state income from real estate tax), information provided by the Latvian Real Estate Association indicates.

The majority of third-country residents who purchase real estate in Latvia favor Riga or Jurmala, a large portion of buyers are interested in other Latvian regions as well, for example, Cesis and Ozolnieki. Reasons for this interest are lower property prices outside the capital, the ecological factor, and well-developed infrastructure. However, one of the most essential criteria when buying property outside the capital, is the distance from Riga, the association explains.

However, after September 1, when amendments to the Immigration Law, which stipulate an increase in the minimal cost of real estate to EUR 250,000 for third-country citizens who wish to apply for residence permits, will come into force, investors' interest will most likely decrease.

"The government's decision will also affect the smaller municipalities. They will be forced to revise their cash flows and reduce expenditures because now the investors will give preference to buying real estate in Riga or Jurmala, instead of Cesis or Jelgava," the CEO of the association Edgars Sins comments.