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According to Rūta Bilkštytė, Deputy Minister of Finance, who presented the proposals of the Ministry of Finance, it is proposed to change the current procedure of taxation of non-commercial real estate (RE). It is proposed to tax all the property owned by a resident from a certain threshold, leaving an exception for the main residence.
The main residence is defined as the property acquired by the resident and must register their place of residence.
It is suggested that tax rates could be established by law or chosen by individual municipalities according to predefined rate ranges.
Lukas April / 15min photo / 15min in the studio – Rūta Bilkštytė and Vlada Musvydaitė
Now the tax-free real estate cartel is set at 150 thousand. euro threshold. This amount has previously been reduced from 250 thousand. euros.
The ministry’s proposal would be to apply a relief to basic housing, and all remaining non-commercial properties would be taxed. Such assets include various kinds of buildings, such as gardens, garages, farms, greenhouses, farms, religious buildings, recreational buildings, and more.
According to the proposals of the Ministry of Finance, the value of real estate owned by this entire population could be added to one, setting a certain threshold: it could be less than 150 thousand. euros. “So there is no difference where a resident is registered, it is important that they have non-commercial property. That property would be added to an amount and taxed, ”said R. Bilkštytė.
There are three alternatives on the table
Three alternatives to the current housing tax regime were also presented at the group meeting. Under current tax laws, $ 5.3 million was collected last year. euros.
The first is to follow the example of Finland and Poland by applying a lower tax rate to housing. For socially vulnerable groups, this fee could be further reduced until the first moment of the transfer of real estate, for example, in the case of inheritance.
Under this alternative, if the rate were 0.01%, a total of 3.5 million euros could be budgeted. euros. After applying NT 0.01-0.1 percent. The fee for the rest of the real estate could fetch another 17.9 million. euros.
According to the ministry, such a model would avoid the artificial transfer of real estate, but at the same time it is observed that the new regime could increase social tensions.
The second alternative is to completely exempt the basic home, without being tied to its value. According to R. Bilkštytė, such a benefit would be easily understandable to residents and, moreover, it would be easy to administer. Its disadvantages are that it would not be socially oriented and would not promote the development of the regions, the population with the most expensive housing would receive the relatively greater amount of benefits.
“Applying the relief would be disproportionate, as some could benefit from lower-value housing, others from higher value. Therefore, a third alternative is offered,” said R. Bilkštytė.
Under this alternative, all of a resident’s property, with the exception of the primary residence, would be taxed, depending on its value. Tax-free real estate amounts could be determined by specific municipalities.
With this option, if the rate were from 0.01% to 0.1%, a total of around 10 million euros could be budgeted. euros. It is estimated that according to this alternative, the city and district of Vilnius, the district of Klaipėda and the municipalities of Neringa would be the ones that would increase their income the most (from 2 to 4%). The municipalities of the Kaunas, Trakai and Druskininkai district would increase their revenues by between 1.5% and 2%. Only one would not get anything of such order: the municipality of Akmenė.
Eriko Ovcharenko / 15min nuotr./Statybos
The Ministry of Finance sees the advantages of this proposal as strengthening the interest of municipalities in improving the tax conditions that determine the value of real estate. The disadvantages of such a proposal are the risk of increasing social tensions.
The Ministry has identified six areas of review of the tax system: promoting the reinvestment of profits, the green exchange rate, reducing income inequality, reviewing special tax conditions and benefits, modeling investment and long-term savings instruments and strengthen municipal financial autonomy.
This group meeting was the penultimate of the six scheduled.
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