What Is Real Estate Tax and How Is It Calculated?
Real Estate (RE) Tax – A Relevant Issue for Both Businesses and Individuals, Especially in Light of Upcoming Tax Reforms
Although currently only certain groups of residents and all legal entities are subject to this tax, starting in 2026, Lithuania plans to introduce a new RE tax model that will apply to nearly all property owners.
It is essential to understand who is currently obligated to pay this tax, how it is precisely calculated and declared, what exemptions apply, and how the system will change in the near future. This article provides a detailed explanation of who is subject to the RE tax, how to avoid errors in its calculation, and what tools and solutions can assist – both for individuals and businesses.
Who Is Required to Pay Real Estate Tax and When?
The current regulations stipulate that:
- Individuals (residents) pay RE tax only when the total value of their residential property exceeds the non-taxable threshold, which typically is:
- €150,000 – if the property belongs to a single person without children;
- €220,000 – if the resident is raising three or more children;
- €200,000 – if the property is jointly owned by spouses.
Important: The tax applies only to the portion of the property value that exceeds the established threshold.
- Legal entities (companies) are required to pay tax on all owned real estate, regardless of its value. The tax rate is determined by municipalities (ranging from 0.3% to 3%), depending on the nature of the property's use.
Certain exemptions also apply, for example:
- For first-time homebuyers;
- For socially vulnerable individuals;
- For persons with disabilities;
- For senior citizens.
How Will the Real Estate Tax Change in 2026?
The government is planning significant changes in the RE tax system – starting in 2026, all residents will be required to pay the tax, regardless of property value.
The goal is to standardize taxation and strengthen municipal budgets. It is anticipated that:
- A progressive but very moderate rate will be applied – from 0.05% to 0.1%;
- Symbolic tax rates will apply to lower-value properties;
- Each municipality will have the authority to determine how rates are applied within its territory.
Property Value
Proposed rate
Property Value
From 100 000 €
Proposed rate
0,05 %
Property Value
From 100 001 €
Proposed rate
0,07 % – 0,1 %
Property Value
> 300 000 €
Proposed rate
> 0,1 % (may be increased)
Property Value
How to Calculate Real Estate Tax?
Real estate tax is calculated using the following formula:
(Property value – non-taxable threshold) × rate
Example: If a person's property value is €250,000 and the non-taxable threshold is €220,000: (250,000 – 220,000) × 0.5% = €150 per year
Important:
- The value is determined based on mass appraisal data from the Centre of Registers.
- You can use the Centre of Registers’ tool designed to check property value.
How to Declare and Pay Real Estate Tax?
- Log in to the Electronic Declaration System of the State Tax Inspectorate (VMI).
- Fill out declaration form FR0431 (for individuals) or KIT715 (for legal entities).
- Submit the declaration by mid-summer (usually by July 1).
- Pay the amount indicated by VMI by the specified deadline.
What If I Didn’t Submit the Declaration or Pay on Time?
- Late payment interest is calculated (0.02% for each delayed day).
- Penalties may apply for late declarations.
- VMI may initiate enforced recovery.
- It is recommended not to delay and to contact VMI for clarification or assistance if needed
Real Estate Tax for Legal Entities
Legal entities pay real estate tax annually:
- Rate: Determined by municipalities, ranging from 0.3% to 3%.
- Forms: Declaration KIT715 must be submitted.
- Exemptions: Limited, depending on the property's intended use.
Summary
- Currently, only a portion of residents and all legal entities pay real estate tax.
- From 2026, it is planned to apply the tax to all residents, introducing a unified rate system.
- Tax calculation is based on the Centre of Registers’ valuation, and declarations are submitted via the VMI system.
- To avoid errors or late fees, it is advisable to use accounting software such as Rivile ERP business management system or Rivile GAMA employee self-service portal.
Frequently Asked Questions
Do I always have to pay real estate tax if I own a home?
No, only if your property value exceeds the established threshold. A first home or having children may result in a higher non-taxable threshold.
How can I find out if I need to pay real estate tax?
Log in to the VMI system or use the Centre of Registers’ property value tool. If you exceed the threshold, the tax applies.
Where can I find the exact value of my property?
On the Centre of Registers’ website – by searching via address or unique property number.
Do I have to pay tax on inherited property?
Yes, if its value exceeds the established threshold and no inheritance exemptions apply.
How do I declare if I sold the property during the year?
You must declare for the period during which you were the owner. A partial amount is calculated proportionally to the ownership period.
Are there ways to reduce or avoid the tax?
Yes, you can use exemptions (first home, number of children, etc.) or adjust the property value if it is overestimated.
If you want to efficiently manage your property and taxes – Rivile ERP helps monitor real estate assets, their values, applicable rates, and declarations. Integration with other systems such as Rivile GAMA or Rivile MSCAN allows businesses to operate more accurately and smoothly.
