The Lithuanian Parliament gave final approval to introduce a tax for homeowners who hold more expensive property as the country seeks budget revenue sources.
Lawmakers approved the law in a 76-5 vote today, with 21 abstentions, to tax the value of real-estate that exceeds 1 million litai ($378,000), according to Parliament’s website. The value exceeding the untaxed 1 million litai threshold will be levied 1 percent per year.
The Baltic nation is introducing a real-estate tax, which has been recommended by the International Monetary Fund for the past few years to expand the budget revenue tax base. The Finance Ministry estimates the so-called “luxury property tax” will add 17 million litai in additional revenue.
The tax may have some “negative effect on demand” for more expensive real-estate, Saulius Vagonis, an analyst at real-estate brokers Ober-Haus in Vilnius, said by phone. “Buyers will now also consider the costs of maintaining the property.”
The Baltic nation’s real estate in the capital of Vilnius remains 28 percent cheaper, compared with price levels before the global economic crisis in 2008, the nation’s registry office said yesterday. Outside of Vilnius, prices are 42 percent below the levels three years ago, it said.
“It’s not a good time to sell, the market is dormant,” Vagonis said. “So owners of more expensive assets are unlikely to increase the supply in a depressive sell-off.”