Preparing an Apartment for Rent | Part 1: Pricing, Taxes, Documents

You bought an apartment and want to rent it out. Great — but between turning the key and welcoming your first tenant, there are several important steps that cost dearly if skipped. In this first part of a three-part series, we'll cover three foundational topics: setting the right rental price, choosing a tax regime, and preparing documents.

Brandon and Heather Turner emphasize in their book "The Book on Managing Rental Properties": renting is a business, not a passive income stream. The sooner you start organizing documents and running the numbers, the fewer unpleasant surprises await you.

How to Set the Right Rental Price

Rental price isn't "how much I want to get" — it's "how much the market is willing to pay." A price that's too high means an empty apartment and monthly losses. Too low — you're losing income for the entire lease term.

Market Analysis — First Step

Before setting a price, you need to understand what similar apartments cost in your area. Here's what to do:

1. Aruodas.lt and Domoplius.lt — filter by neighborhood, number of rooms, and area. Review at least 15–20 similar listings.
2. Pay attention to price per m² — this allows you to compare apartments of different sizes more objectively.
3. Watch how long listings stay up — if similar apartments rent within days, you can ask for a bit more. If they sit for months, there may be an oversupply in your area.

For a more detailed analysis, we recommend using the TurtoMatas rental report — it lets you perform market analysis by specific location and get objective data on rental price levels.

Price Adjustments Based on Condition

Found the market average? Now adjust based on your apartment's advantages and disadvantages:

• +5–15% above average: new renovation, furniture, appliances, parking, energy class A/B
• Average: standard condition, basic furnishing
• -5–15% below average: old renovation, no balcony, low floor, noisy street

💡 Tip: Before setting the final price, check whether the investment pays off. Use the profitability calculator — it will show your investment return rate and how long it takes to break even.

The Link Between Rental Price and Investment Return

Brandon Turner recommends the "1% rule" — monthly rent should be at least 1% of the property value. In Lithuania, this rule is hard to achieve (especially in central Vilnius), but it's useful as a benchmark. Realistic rental yields in Vilnius range from 3% to 6% annually, depending on location and apartment type.

To more accurately estimate your apartment's market value, you can use the property value calculator.

Choosing a Tax Regime

This is where many landlords make mistakes — either not paying taxes at all (which is illegal), or choosing the wrong regime and overpaying. In Lithuania, there are two main options:

Business Certificate (Verslo liudijimas)

A business certificate is a fixed annual tax set by the municipality. Its size depends on the municipality and activity zone, so the price can vary between different cities.

How it works:

• You buy a business certificate for a specific activity — "residential premises rental"
• The tax is fixed, regardless of income level
• Applies to one property — if you rent two apartments, you need two certificates
• In addition to income tax, you need to pay social insurance (PSD) contributions to Sodra

The exact price for your municipality can be found through the Mano VMI business certificate calculator — when filling out the application, the system automatically calculates the payable amount.

Advantages:

• Simplicity — fixed amount, no bookkeeping
• Can be cheaper than 15% income tax if rental income is higher

Disadvantages:

• Cannot deduct any expenses (renovation, furniture, utilities)
• Applies to one property only

💡 Tip: If your rent is relatively low (e.g., €300/month), the annual 15% income tax amount might be less than the business certificate cost. Before buying a certificate, it's worth calculating both options.

Individual Activity (Individuali veikla)

The second option — you register individual activity with the tax authority (VMI) and pay 15% income tax on earnings.

How it works:

• Register individual activity through Mano VMI
• You can deduct 30% of expenses without any receipts (or actual expenses with documentation)
• Pay 15% income tax on taxable income
• Additionally, you need to pay social insurance (VSD and PSD) contributions to Sodra

Practical example:

• Rental income: €800/month = €9,600/year
• Deduct 30%: €9,600 × 0.70 = €6,720
• Income tax 15%: €6,720 × 0.15 = €1,008/year

Advantages:

• Ability to deduct expenses — especially useful if you're investing in renovation
• Works for multiple properties simultaneously

Disadvantages:

• More complex accounting than a business certificate
• Required Sodra contributions

Tax Comparison Table

*The exact business certificate amount depends on the municipality — check through Mano VMI.

When to Choose What?

• Business certificate — if you rent one apartment, income is higher (€600+/month), you don't want to deal with bookkeeping, and you're not planning major renovations.
• Individual activity — if you rent multiple properties, plan to invest in renovation (you'll deduct expenses), or rental income is relatively low.

Simulate different investment plans and tax scenarios with the profitability calculator — it will help you make a decision based on numbers, not intuition.

Essential Documents for Renting

Documents aren't bureaucracy — they're your protection. Every skipped document is a potential dispute in the future.

Lease Agreement

The main document, regulated by the Civil Code of the Republic of Lithuania (Articles 6.575–6.609). The agreement must include:

• Parties: landlord's and tenant's full name, personal identification number
• Property: exact address, unique number, area
• Rental price and payment terms: amount, payment date, bank account
• Term: start and end of lease (or indefinite)
• Utility payment arrangements: who pays and how
• Termination conditions: notice periods (Civil Code requires no less than 3 months' notice from the landlord)
• Rights and obligations of parties: what is and isn't allowed

💡 Tip: Use a professionally prepared lease template. There are free versions online, but ideally have a lawyer review the agreement — it costs €50–150 and can save thousands in case of a dispute.

Property Handover Act

This is the most important document after the lease agreement. It records the apartment's condition at handover and serves as the primary evidence in damage disputes.

What it should include:

• Detailed description of each room (walls, floors, ceilings, windows)
• List of appliances and furniture with condition notes
• Meter readings (cold/hot water, electricity, gas)
• Photos or video recording — the more, the better
• Signatures of both parties and date

Prepare the same act when the tenant moves out — only then can you objectively compare conditions and decide about the deposit.

Deposit Agreement

• Standard size in Lithuania: 1–2 months' rent
• The deposit must be clearly described in the lease agreement or a separate arrangement
• State conditions: when it's returned, when and how much can be deducted
• The deposit is returned within the agreed timeframe after move-out and signing the handover act

Additional Documents and Steps

• Property insurance — not mandatory but highly recommended. The policy should cover tenant-caused damage, fire, water accidents
• Income declaration to VMI — mandatory regardless of chosen tax regime
• Lease registration at the Registry Center — not mandatory but provides additional legal protection (e.g., if the apartment is sold, tenant rights are preserved)

Document Checklist

Before handing over the keys, verify:

• ☐ Lease agreement signed by both parties
• ☐ Property handover act with photos
• ☐ Deposit paid and documented in writing
• ☐ Meter readings recorded in the act
• ☐ House/apartment rules provided in writing
• ☐ Property insurance is valid
• ☐ Income declared to VMI / business certificate obtained
• ☐ Emergency contact information provided to tenant
• ☐ Number of keys recorded in the act

Common Mistakes

1. Shadow renting — renting without a contract and not declaring income. Tax authority fines can reach up to 50% of unpaid taxes + late payment interest.
2. Not documenting apartment condition — without a handover act and photos, you can't prove the tenant caused damage.
3. Wrong tax regime — common case: someone pays for a business certificate even though rental income is so low that 15% income tax would be cheaper.
4. Insufficiently detailed contract terms — "we agreed verbally" doesn't work when problems arise.
5. Price too high or too low — too high = empty apartment costing you money; too low = lost income for the entire lease term.

Frequently Asked Questions (FAQ)

Is it mandatory to register a lease agreement at the Registry Center?

No, it's not mandatory. However, registration provides additional legal protection — for example, if the apartment were sold, a registered lease agreement remains valid for the new owner.

How large a deposit can I request?

Lithuanian law doesn't set a strict limit, but the market standard is 1–2 months' rent. Requesting 3+ months' deposit may deter potential tenants.

Can I rent out an apartment that has a mortgage?

Yes, but you need to check the bank's contract terms. Some banks require notification or consent. In practice, most banks don't object as long as the rental doesn't change the property's purpose.

What to do if the tenant doesn't pay rent?

First — a written reminder. Under the Civil Code, the landlord can terminate the agreement if the tenant hasn't paid rent for more than 3 months. However, evicting a tenant without a court order is illegal.

How much does a business certificate for rental cost?

The exact amount is set by each municipality separately. The annual cost varies depending on the city and activity zone. You can find the exact price through the Mano VMI business certificate ordering system.

Sources:

1. Civil Code of the Republic of Lithuania, Articles 6.575–6.609 — accessed 2026-03-27
2. VMI — Business certificates — accessed 2026-03-27
3. TurtoMatas — rental report — accessed 2026-03-27
4. Aruodas.lt — apartments for rent in Vilnius — accessed 2026-03-27
5. Brandon Turner, Heather Turner — "The Book on Managing Rental Properties" (BiggerPockets, 2015)

This is the first part of a three-part series "Preparing an Apartment for Rent." Next part — a practical apartment preparation guide: interior design, furniture, styles, and differences between long-term and short-term rental.