Taxes When Buying Property
Income Tax on Purchase
Key conditions:
- Properties up to $200,000: no tax
- Properties over $200,000: 4% on the excess amount
- First-time buyer exemption: applies to residents
Calculation examples:
Apartment for $150,000:
- Tax = $0 (within exemption)
Apartment for $250,000:
- Excess amount: $250,000 - $200,000 = $50,000
- Tax: $50,000 × 4% = $2,000
Apartment for $500,000:
- Excess amount: $300,000
- Tax: $300,000 × 4% = $12,000
Who Pays the Tax on Purchase
- Resident buyer: pays if exceeding the limit
- Non-resident buyer: same conditions
- Exemption: first purchase by resident up to $200,000
Taxes When Selling Property
Income Tax on Sale
Taxation rules:
- Ownership less than 2 years: 20% on profit
- Ownership more than 2 years: tax exemption
- Sole residence: full exemption
Sale tax calculation:
Example 1 — ownership 1 year:
- Purchase: $60,000
- Sale: $80,000
- Profit: $20,000
- Tax: $20,000 × 20% = $4,000
Example 2 — ownership 3 years:
- Purchase: $60,000
- Sale: $90,000
- Profit: $30,000
- Tax: $0 (ownership >2 years)
Exemptions on Sale
Profit reinvestment:
- Buying another property within one year
- Full tax exemption on reinvestment
- Applies to any property value
Sale of sole residence:
- Full tax exemption
- Regardless of ownership period or profit
Property Tax
Rates and Conditions
Tax amount:
- Residential property: 0.05–1% of cadastral value
- Commercial property: up to 1%
- Land plots: 0.05–1.5%
Cadastral vs market value:
- Cadastral value usually 30–50% below market
- Revaluation every 4 years
- Possible to challenge overvaluation
Calculation Examples
Apartment with market value $100,000:
- Cadastral value: ~$70,000
- Tax: $70,000 × 0.05% = $35/year
Apartment with market value $300,000:
- Cadastral value: ~$200,000
- Tax: $200,000 × 0.1% = $200/year
Taxes on Rental Income
Taxation Options
Micro-business status:
- Turnover up to 30,000 GEL/year: 1% of gross income
- Simple reporting: once a year
- No VAT: no need to register
Standard taxation:
- Income tax: 20% on net profit
- VAT: 18% if turnover exceeds 30,000 GEL
- Full accounting required
Tax Regime Comparison
$10,000 annual income:
Micro-business status:
- Tax: $10,000 × 1% = $100
- Net income: $9,900
Standard taxation:
- Income: $10,000
- Expenses (documented): $3,000
- Taxable profit: $7,000
- Tax: $7,000 × 20% = $1,400
- Net income: $8,600
Savings with micro-business: $1,300
Tax Benefits and Exemptions
Benefits for Residents
Georgian resident status:
- Exemption on first purchase up to $200,000
- Income tax benefits
- Preferential mortgage options
How to obtain residency:
- Living in Georgia >183 days/year
- Or having center of vital interests in Georgia
Benefits for Investors
International Financial Company program:
- Income tax exemption
- Profit tax benefits
- Special regime for large investments
Eligibility:
- Investment from $500,000
- Job creation
- Meeting program criteria
International Taxation
Double Taxation Avoidance Agreements
Active agreements:
- Russia: 1999 agreement in force
- Most EU countries
- USA
Credit principles:
- Taxes paid in Georgia credited in residence country
- Requires tax payment certificates
- Higher rate principle applies
Taxation for Russian Residents
Russian obligations:
- Declare foreign property income
- Pay 13% personal income tax on worldwide income
- Credit taxes paid in Georgia
Example for Russian:
- Rental income in Batumi: $10,000
- Tax in Georgia (1%): $100
- Additional tax in Russia: $10,000 × 13% - $100 = $1,200
Practical Tax Optimization Tips
Ways to Reduce Taxes
When buying:
- Buy properties under $200,000 to avoid tax
- Consider multiple owners
- Use first-time buyer exemption
When selling:
- Hold property >2 years
- Reinvest profit in new property
- Sell sole residence
When renting:
- Register micro-business for income up to ~$11,000/year
- Track all expenses under standard regime
- Consider registering on Georgian resident
Documentation and Reporting
Required documents:
- Sale contracts with real price
- Property valuation reports
- Expense receipts
- Tax payment certificates for credits
Declaration deadlines:
- By April 15 of following year
- Micro-business: simplified form
- Standard: detailed declaration
2025 Tax Law Changes
New Initiatives
Digitalization:
- Electronic declarations
- Automatic tax calculation
- Online debt notifications
IT sector benefits:
- International IT company status
- Preferential taxation for IT workers
- Remote work opportunities
Planned Changes
Under consideration:
- Increasing micro-business turnover limit
- Additional benefits for long-term investors
- Simplified procedures for non-residents
Conclusion
Georgia's tax system remains one of the most attractive for property investors. With proper planning, you can minimize the tax burden and maximize investment returns.
Key principles:
- Study all available benefits
- Plan ownership and sale timelines
- Use optimal tax regimes
- Maintain proper documentation
Recommendations:
- Consult tax advisors
- Monitor legislative changes
- Plan tax implications in advance
- Use double taxation agreements
With a smart approach, the effective tax rate on Batumi property can be 1–3% of income — significantly lower than in most European countries.
Article prepared by: Georgian tax consultants
Data current as of: September 2025
Note: Legislation may change; always verify latest rules
