Financial Preparation

• Determine your total investment budget (property + transaction costs + reserves)
• Establish a currency exchange strategy (EUR/USD or EUR/CAD)
• Research historical exchange rate patterns to identify favorable timing
• Set up international wire transfer capabilities with your home bank
• Consider opening a Latvian or EU bank account (increasingly requires in-person visit)
• Evaluate tax implications in both Latvia and your home country
• Decide whether to use financing or make a cash purchase

Market Research

• Identify target cities based on investment goals (capital growth vs. rental yield)
• Research neighborhood-specific price trends and rental demand
• Join online forums for property investors in Latvia and the Baltics
• Subscribe to property market reports (Colliers, Ober-Haus, Latio)
• Analyze infrastructure projects and development zones
• Research tenant demographics in target areas (locals, expats, tourists)
• Plan a preliminary market visit to evaluate areas firsthand

Professional Network Development

• Connect with Latvian real estate lawyers specializing in foreign client services
• Identify real estate agencies with English-speaking agents
• Research property management companies in your target market
• Establish contact with currency exchange specialists for EUR transfers
• Find a Latvian tax advisor familiar with international tax matters
• Connect with building inspectors or construction specialists
• Consider mortgage brokers if financing will be required

Expert Tip: Latvia’s property market has distinct seasonal patterns. Spring (April-June) and early autumn (September-October) typically feature the most active markets with the largest selection of properties. Winter months see reduced activity and potentially better negotiating positions, but significantly fewer listings. The summer tourist season (July-August) can be challenging for property viewing in coastal and resort areas due to short-term rental activity.

Recent Regulatory Change: Latvia reformed its corporate tax system in 2018, introducing a 0% tax rate on reinvested profits and a 20% rate on distributed profits (effectively when withdrawn as dividends). This change has made the Latvian SIA structure more attractive for property investors who plan to reinvest rental income into additional properties or property improvements, as they can defer taxation until profits are actually distributed to shareholders.

Banking Setup

• Latvian Bank Account Options:
  • Local Latvian banks: Citadele, BlueOrange Bank
  • Nordic banks with Latvian presence: SEB, Swedbank, Luminor
  • International banks: Limited presence but accessible through EU branches
  • Fintech alternatives: Revolut, Wise, Paysera offer EU-based accounts
• Typical Requirements:
  • Valid passport with visa/residence permit if applicable
  • Proof of address in home country
  • Documentation of income sources
  • Tax residency certificate (may be required)
  • In-person visit usually required for account opening
  • Additional KYC documentation for transactions over €15,000
• Important Considerations:
  • Latvian banks have significantly enhanced AML/KYC procedures following banking sector reforms
  • Non-resident accounts face heightened scrutiny and may have higher fees
  • Some banks may decline non-resident accounts without substantial economic connections to Latvia
  • Banking in neighboring EU countries (Estonia, Lithuania) may be alternative options

Financing Options

While cash purchases are common among foreign investors, financing options include:

1. Latvian Mortgage Loans:
   • Availability: Major Latvian and Nordic banks offer mortgages to foreign buyers
   • Loan-to-Value (LTV): 50-70% for foreign buyers (higher for EU residents)
   • Interest Rates: 3-5% for EUR loans, fixed and variable options available
   • Term: Up to 25 years, though 15-20 years more common for non-residents
   • Income Requirements: Typically 30-40% debt-to-income ratio maximum
   • Documentation: Income verification, credit history, property appraisal, and additional due diligence for non-residents
2. Developer Financing:
   • Some developers offer payment plans for new construction
   • Typically requires 30-50% down payment
   • Shorter terms (3-5 years) with higher interest rates than bank loans
   • Less stringent qualification requirements than traditional mortgages
3. Home Country Financing:
   • Refinancing existing properties in North America
   • Home equity lines of credit (HELOCs)
   • Investment property loans in home country
   • May offer better rates but adds currency exchange risk

Currency Management

The Euro (€) is Latvia’s official currency, creating both opportunities and challenges for North American investors:

• Exchange Rate Considerations:
  • Monitor EUR/USD and EUR/CAD trends to identify favorable exchange windows
  • Consider working with a currency specialist offering rate alerts
  • Strong USD/CAD means more purchasing power in Latvia
• Currency Services:
  • Specialized services like Wise, OFX, or Currencies Direct typically offer better rates than banks
  • Forward contracts can lock in exchange rates for future payments
  • Regular payment services for ongoing costs or rental income repatriation
• Income Repatriation:
  • Consider timing of rental income transfers to home country
  • Be aware of both Latvian and home country reporting requirements for foreign income
  • Maintain accurate records of all currency conversions for tax purposes

Latvia’s Euro membership provides significant stability compared to countries with independent currencies, reducing one element of risk for foreign investors. However, the EUR/USD and EUR/CAD exchange rates can still significantly impact your effective returns when measured in your home currency.

Property Search Resources

• Online Property Portals:
  • SS.lv – Latvia’s largest classified site with extensive listings
  • City24.lv – Popular real estate portal with English interface
  • Latio.lv – Agency site with quality listings and market reports
  • Ober-Haus – Baltic real estate agency with English services
• Real Estate Agencies:
  • International agencies: Century 21, Colliers, Sotheby’s International Realty
  • Baltic/Nordic agencies: Ober-Haus, Latio, Arco Real Estate
  • Local boutique agencies specializing in specific market segments
  • Note: Unlike North America, most Latvian agents represent both buyers and sellers
• New Developments:
  • Direct from developers (YIT, Merks, Bonava, and local developers)
  • New project showcases and exhibitions
  • Often offer better pricing at pre-construction phases
• Bank Foreclosures & Auctions:
  • Bank owned property portfolios (Citadele, Swedbank)
  • Government auction site: izsoles.ta.gov.lv
  • Potential for below-market deals but requires thorough due diligence

Property Viewing Trip Planning

For overseas investors, an efficient property viewing trip is essential:

1. Pre-Trip Research:
   • Identify 10-15 potential properties before arrival
   • Establish contact with agents to arrange viewings
   • Research neighborhoods thoroughly online (including Google Street View)
   • Arrange meetings with lawyers and bankers if needed
2. Trip Logistics:
   • Plan at least 3-5 days for property viewing in each target city
   • Stay in the neighborhoods you’re considering to experience them firsthand
   • Schedule viewings in geographical clusters to maximize efficiency
   • Allow time for neighborhood exploration on foot and via public transport
3. During Viewings:
   • Take detailed photos and videos, including building exteriors and common areas
   • Ask about utility costs, renovation history, and maintenance issues
   • Inquire about building management and community decisions
   • Check mobile reception, internet availability, and connectivity
   • Note proximity to transport, schools, shopping, and other amenities
4. Consider engaging a buyer’s agent who can:
   • Provide independent advice (not representing sellers)
   • Pre-screen properties matching your criteria
   • Arrange efficient viewing schedules
   • Offer market insights and negotiation support
   • Continue the search process after you return home

Property Evaluation Criteria

Assess potential investments using these key criteria:

• Location Factors:
  • Transport links (bus/tram stops, train stations, airport access)
  • Walking distance to amenities (shops, restaurants, parks)
  • School proximity (important for family rentals)
  • Crime statistics for the neighborhood
  • Future development plans and infrastructure projects
  • Proximity to employment centers and universities
• Building Quality:
  • Building age and construction type (pre-war, Soviet-era, or modern)
  • Energy efficiency and utilities (district heating vs. individual systems)
  • Renovation status and history (particularly important for older buildings)
  • Common area condition and maintenance
  • Building management quality and reserves
  • Potential maintenance or renovation requirements
• Rental Potential:
  • Rental yield compared to area average
  • Tenant demographics (locals, expats, students, tourists)
  • Seasonal factors (especially for resort properties)
  • Potential for value-add improvements
  • Short-term vs. long-term rental potential
  • Vacancy rates in the area
• Financial Considerations:
  • Price per square meter compared to area average
  • Building maintenance fees and utility costs
  • Property tax assessment
  • Insurance costs
  • Potential capital appreciation based on area development
  • Exit strategy considerations

Expert Tip: In Latvia, the ownership of land and buildings can be separate. When evaluating properties, confirm whether the offering includes both land and building ownership, or if there’s a land lease agreement (zemes noma) in place. Properties where you own both the building and land are generally preferable as they avoid potential disputes with landowners and long-term lease payments. This is particularly important for houses and smaller apartment buildings.

Legal Due Diligence

• ✓
  Land Registry Extract (Zemesgrāmata): Verify current ownership, encumbrances, and restrictions
• ✓
  Cadastral Documentation: Check property boundaries, dimensions, and official designation
• ✓
  Land and Building Ownership: Verify if land and building have same owner or if land lease agreement exists
• ✓
  Municipal Zoning: Confirm property use aligns with zoning and future development plans
• ✓
  Building Permit Verification: Ensure all structures and renovations have proper approvals
• ✓
  Debt Check: Verify no outstanding utility bills, tax liabilities, or management fees
• ✓
  Apartment Building Documentation: Review building regulations, management structure, and financial statements
• ✓
  Heritage Protection Status: Identify any preservation requirements for historical buildings

Physical Due Diligence

• ✓
  Property Inspection: Commission thorough inspection by qualified building specialist
• ✓
  Building Systems Assessment: Evaluate heating, plumbing, electrical, and structural elements
• ✓
  Energy Efficiency: Review insulation, windows, heating system, and energy certificate
• ✓
  Water and Moisture Issues: Check for leaks, water damage, and humidity problems (common in older buildings)
• ✓
  Common Areas (if applicable): Inspect stairwells, elevators, roof, basement, and facade condition
• ✓
  Internet Connectivity: Verify available providers and speeds
• ✓
  Renovation Assessment: Get contractor estimates for planned improvements

Financial Due Diligence

• ✓
  Comparative Market Analysis: Verify price aligns with recent comparable sales
• ✓
  Rental Market Research: Confirm realistic rental expectations with local agents
• ✓
  Tax Calculation: Determine property tax, income tax, and transaction taxes
• ✓
  Running Cost Assessment: Estimate maintenance fees, utilities, insurance, and management costs
• ✓
  ROI Calculation: Develop detailed cash flow projections and return analysis
• ✓
  Future Expenses: Research building renovation plans and potential special assessments

Expert Tip: Soviet-era apartment buildings (built 1960s-1980s) make up a significant portion of Latvia’s housing stock. While these buildings often offer affordable entry prices and good rental yields, they typically have higher heating costs and may require significant maintenance. Look closely at energy efficiency improvements and building renovations. Many buildings have undergone facade insulation and heating system upgrades using EU funds, significantly improving their long-term value and reducing operating costs.

Offer and Negotiation

1. Make an Offer: Typically done verbally through the real estate agent
2. Negotiation: Back-and-forth on price, payment terms, and included items
3. Reservation Agreement (optional): Some sellers request a small deposit to take the property off the market
4. Preliminary Agreement (optional): More detailed agreement specifying terms and conditions

Unlike North America, the Latvian market often involves more direct price negotiation, with discounts of 5-10% from asking price being common for resale properties. New developments typically have less negotiating room but may offer payment plan incentives or finishing allowances.

Purchase Process

1. Engage a Lawyer/Notary: Professional legal assistance is essential for foreign buyers
2. Due Diligence: Complete legal and physical property inspection
3. Purchase Agreement Preparation: Draft and review of the purchase agreement
4. Bank Account Setup: Required for transaction funds if financing is not used
5. Notary Appointment: In-person signing of the purchase agreement before a notary public
   • Both parties must be present or represented by power of attorney
   • Notary verifies identities and explains legal implications
   • All documents must be in Latvian (translations can be provided)
   • Full payment or agreed deposit is typically made at this time
6. Land Registry Application: Filed by the notary or lawyer
   • Property tax must be paid before registration
   • Stamp duty and registration fees must be paid
   • Processing typically takes 10-15 business days
7. Final Settlement: Any remaining payments made according to the agreement
8. Property Handover: Keys, utility meters, and property inspection

The entire process from offer acceptance to completion typically takes 4-8 weeks for a straightforward cash transaction, potentially longer if financing or special permits are required. Foreign buyers should plan for additional time due to documentation requirements.

Transaction Costs

Budget for these typical transaction expenses:

• Notary Fees: 0.1-1% of property value (varies by transaction complexity)
• State Duty: 2% of property value (capped at €42,686.15)
• Land Registry Fee: €14.23 plus 0.1% of property value
• Legal/Lawyer Fees: €1,000-2,500 depending on complexity
• Real Estate Agent Commission: 3-5% (typically paid by seller but can be negotiated)
• Property Valuation: €100-300 (if required for mortgage)
• Translation Services: €100-500 depending on documentation volume
• Bank Fees: For international transfers (0.1-1% typically)

Total transaction costs for foreign investors typically range from 3-6% of the purchase price. If pursuing residency through the property investment program, additional government fees apply (€5,000 for the application).

Expert Tip: For foreign buyers unable to be present in Latvia for the entire transaction process, a notarized and apostilled power of attorney is essential. This should be prepared in advance in your home country, then apostilled for legal recognition in Latvia. The document should specifically authorize your chosen representative to sign all necessary property documents, make payments, and complete registration on your behalf. Include specific property details if possible, or create a general real estate power of attorney if still searching for properties.

Administrative Tasks

• ✓
  Property Tax Registration: Register with the municipal tax authority (automatically transferred with ownership)
• ✓
  Utility Transfers: Change account holders for electricity, gas, water, and heating
• ✓
  Building Management: Register with the building management company or association
• ✓
  Insurance: Obtain property insurance (building and contents)
• ✓
  Internet/Cable: Set up telecommunications services
• ✓
  Alarm/Security: Transfer or establish security monitoring if applicable
• ✓
  Declared Residence: If pursuing residency, register your declared address with the Population Register

Regulatory Compliance

Rental properties in Latvia must comply with these regulations:

• Residential Property Renting:
  • Mandatory written lease agreement
  • Registration of long-term leases in the Land Registry (optional but recommended)
  • Compliance with minimal amenity requirements (heating, water, electricity)
  • Building safety compliance and inspections
• Short-Term Rentals:
  • Registration with local municipality for tourist accommodation
  • Compliance with specific safety requirements (fire alarms, evacuation plans)
  • Additional insurance requirements
  • Possible restrictions in certain buildings or neighborhoods
• Utility Standards:
  • Minimum heating temperature requirements during winter
  • Water and electrical safety standards
  • Energy efficiency compliance for newer buildings
• Taxation Compliance:
  • Registration of rental income with tax authorities
  • VAT registration (required for short-term rentals above threshold)
  • Proper accounting and receipt issuance

For foreign investors, using a professional property management company can ensure compliance with all regulatory requirements. Changes to rental regulations occur periodically, so staying informed or delegating compliance to a qualified manager is essential.

Record Keeping

Maintain comprehensive records for tax and legal purposes:

• Property Documents:
  • Purchase contract and deed
  • Land Registry extract (Zemesgrāmata)
  • Cadastral documentation
  • Property insurance policies
  • Building technical documentation
  • Renovation permits and approvals
• Financial Records:
  • All property-related expenses with receipts
  • Mortgage statements (if applicable)
  • Utility payments and building maintenance fees
  • Property tax payments
  • Rental income and tenant deposits
  • Currency exchange transactions
• Tax Documentation:
  • Annual tax returns (Latvia and home country)
  • Capital improvements (which may reduce future capital gains tax)
  • Depreciation schedules (if applicable)
  • VAT returns (if registered)
• Tenant Information:
  • Lease agreements
  • Tenant identification documents
  • Payment records
  • Property condition reports
  • Correspondence regarding maintenance

Latvian tax authorities typically require records to be kept for 5 years. Digital record-keeping systems with secure backups are recommended, particularly for overseas investors managing properties remotely.

Expert Tip: Latvia’s heating season (typically October to April) can significantly impact property operating costs. District heating (centrālā apkure) is common in Soviet-era apartment buildings and some newer developments, with costs allocated based on building area rather than actual consumption. Individual heating systems give more control but require maintenance. When buying, check the heating system type, average costs over recent winters, and energy efficiency rating, as these factors can substantially affect your operating expenses and rental returns.

Latvian Tax Obligations

• Property Tax:
  • Annual tax on land and buildings
  • Rates range from 0.2-3% of cadastral value
  • Residential properties: 0.2-0.6% depending on value
  • Commercial properties: 1.5%
  • Land: 0.2-3% depending on usage and location
  • Payable quarterly or annually to local municipality
• Personal Income Tax on Rental Income:
  • Standard rate: 20% on net rental income
  • Simplified regime option: 10% of gross rental income without expense deductions
  • Annual filing required by June 1 following the tax year
  • Allowable deductions include property tax, insurance, repairs, management fees, and interest
  • Depreciation of 5% annually can be claimed on buildings used for economic activity
• Corporate Income Tax (if using Latvian company):
  • 0% tax on reinvested profits
  • 20% tax on distributed profits (effectively 20/80 or 25% of the net payment)
  • Monthly or quarterly filing depending on size
  • All business expenses generally deductible if properly documented
• Value Added Tax (VAT):
  • Standard rate: 21%
  • Residential property rental typically VAT exempt
  • Commercial property rental can be VAT registered voluntarily
  • Registration required if short-term rental income exceeds €40,000 in 12 months
  • Filing typically monthly or quarterly
• Capital Gains Tax:
  • Included in regular income tax (20% rate)
  • Exemption available for primary residence owned more than 24 months
  • Reduced rates for properties held more than 5 years in some cases
  • Purchase costs and capital improvements can reduce taxable gain

Home Country Tax Obligations

Latvia has tax treaties with both the United States and Canada which help prevent double taxation. These treaties typically allow property taxes and income taxes paid in Latvia to be credited against home country tax obligations. Consult with tax professionals familiar with both jurisdictions to optimize your tax position.

Tax Planning Strategies

• Entity Structure: Evaluate whether personal ownership or Latvian SIA is more tax-efficient
• Expense Documentation: Maintain meticulous records of all allowable expenses to maximize deductions
• Reinvestment Planning: Using a Latvian company structure allows tax-free reinvestment of profits
• VAT Strategy: Determine optimal VAT registration status based on property type and tenant profile
• Capital Improvements: Document all capital expenditures which may reduce future capital gains tax
• Depreciation Planning: Optimize allowable depreciation schedules for business-use properties
• Timing of Disposals: Consider holding periods and market timing to optimize capital gains position
• Foreign Tax Credit Planning: Coordinate Latvian and home country tax filings to maximize credits

Latvia’s tax system has undergone significant reforms in recent years, particularly the corporate tax system which now incentivizes profit reinvestment. Regular consultations with tax professionals familiar with both Latvian and home country tax laws are essential to ensure continued compliance and optimal structuring.

Expert Tip: Latvia’s simplified tax regime for rental income (10% of gross income without expense deductions) can be advantageous for properties with minimal operating expenses and maintenance needs, such as newer apartments or properties with utilities included in tenant payments. However, for properties requiring significant maintenance or with high operating costs, the standard 20% rate with full expense deductions often results in lower overall tax liability. Run calculations under both scenarios to determine the optimal approach for your specific property.

Selecting a Property Manager

Evaluate potential property managers using these criteria:

• Experience with International Clients:
  • English language proficiency
  • Understanding of foreign investor needs
  • International banking and payment capabilities
• Professional Qualifications:
  • Property management certification or real estate license
  • Professional liability insurance
  • Membership in industry associations
• Market Knowledge:
  • Track record in your property’s location and segment
  • Understanding of local rental market trends
  • Proven tenant sourcing strategies
• Communication:
  • Responsive to owner inquiries
  • Regular reporting systems
  • Transparent communication channels
• Maintenance Network:
  • Established contractor relationships
  • Emergency response procedures
  • Preventative maintenance programs
• Financial Systems:
  • Secure rent collection methods
  • Clear accounting and reporting
  • International payment options

Management Agreement Essentials

Ensure your property management contract includes these key elements:

• Scope of Services: Clear definition of included and excluded services
• Fee Structure: All management fees, commissions, and additional charges
• Contract Term and Termination: Duration and notice periods
• Financial Reporting: Frequency and format of financial statements
• Maintenance Authority: Spending limits requiring owner approval
• Tenant Selection Criteria: Qualification standards and screening process
• Rent Collection Procedures: Methods, timing, and handling of arrears
• Insurance Requirements: Coverage expectations and responsibilities
• Legal Compliance: Responsibility for regulatory adherence
• Property Inspection: Frequency and reporting of inspections
• Owner Communication: Regular updates and emergency notifications
• Dispute Resolution: Process for addressing disagreements

For foreign investors, additional considerations should include provisions for international banking, currency handling, and clear communication protocols accounting for time zone differences.

Expert Tip: Latvia’s property management industry has developed significantly in recent years, but quality can vary substantially. For foreign investors, companies with international experience or affiliated with global networks tend to offer more consistent service. Ask potential management companies about their systems for remote owner management – those with proper online portals, regular reporting procedures, and secure international payment processing will make long-distance ownership significantly easier. Request references specifically from other foreign clients to gauge their experience working with overseas investors.

Exit Options

Sale Process

When selling your Latvian property:

1. Pre-Sale Preparation:
   • Property presentation and minor repairs
   • Professional photography and virtual tours
   • Energy certificate update if needed
   • Gather all relevant documentation
2. Agent Selection:
   • Choose agency with experience in your property segment
   • Consider international agencies for better foreign buyer reach
   • Negotiate commission rates (typically 3-5%)
   • Exclusive vs. non-exclusive listing approach
3. Pricing Strategy:
   • Recent comparable sales analysis
   • Current market conditions assessment
   • Pricing position relative to similar listings
   • Room for negotiation considerations
4. Marketing Period:
   • Online listings on multiple platforms
   • Professional presentation and showings
   • Regular feedback and market updates
   • Price adjustment if necessary
5. Offer Negotiation:
   • Evaluate offers on price, terms, and buyer qualification
   • Consider earnest money deposit requirements
   • Negotiate closing timeline and conditions
6. Sales Agreement:
   • Legal review of purchase agreement
   • Notary appointment scheduling
   • Required documentation preparation
7. Closing Process:
   • Final notary appointment
   • Payment verification
   • Title transfer documentation
8. Post-Sale Requirements:
   • Capital gains tax filing
   • Utilities and service cancellations
   • International fund transfer planning
   • Residency permit considerations if applicable

The selling process typically takes 2-6 months from listing to completion, depending on property type, location, and market conditions. Foreign sellers should plan for potential additional documentation requirements and international fund transfers.

Market Exit Timing Considerations

Several factors should influence your exit timing decision:

• Latvian Property Cycle: The market typically follows 7-10 year cycles, with current indicators suggesting a growth phase following post-pandemic recovery
• Currency Exchange Rates: Euro strength against your home currency can significantly impact your return when converting sales proceeds
• Interest Rate Environment: Rising rates typically reduce buyer demand and affordability, while falling rates stimulate the market
• EU Economic Conditions: Latvia’s market is increasingly influenced by broader EU economic trends
• Infrastructure Developments: Major projects like Rail Baltica (Baltic high-speed rail) can significantly impact property values in affected areas
• Seasonal Factors: Spring (April-June) and early autumn (September-October) typically see highest buyer activity
• Tax Year Considerations: Timing sales relative to tax years in both Latvia and home country can optimize tax position
• Residency Permit Status: If property ownership supports a residence permit, consider timing impact on immigration status

The most successful investors establish clear performance benchmarks and regularly evaluate their Latvian property investments against both local and global alternatives. Having a pre-determined exit strategy with specific triggers (appreciation targets, holding period, personal circumstances) helps maintain objectivity in investment decisions.

Expert Tip: For North American investors selling Latvian property, international fund transfers require careful planning. Large transfers from Latvian banks may trigger enhanced due diligence procedures, potentially causing delays. Prepare documentation demonstrating the original source of funds used for purchase, proof of property ownership, and the sales contract. Consider working with specialized currency services rather than traditional banks for better exchange rates. If the proceeds are substantial, a staged transfer approach may be preferable to a single large transaction.