Real estate assets worldwide are considered among the most expensive assets an individual can own. As a result, virtually every country has its own real estate regulations, expressed primarily through property taxation. In this article we explain everything you need to know about real estate taxation in Georgia.
Real Estate in Georgia
Real property assets are assets that cannot be physically moved or transferred. This means that real estate can include land, but also an apartment in a residential building or a private house. For Israelis, Georgian real estate is relevant mainly in the context of investment.
Since real estate can be a highly profitable investment channel — given the large sums that circulate in the sector — many Israelis are drawn to it. Housing prices in Israel are considered especially high, and within the framework permitted by Israeli law, many citizens find the Georgian real estate market attractive, partly due to its favourable tax regime.
Property Tax in Georgia
Do not confuse property tax with purchase tax. Purchase tax — one type of real estate tax that exists in Israel — is a percentage of the apartment price that the buyer must pay at the time of acquisition. Property tax is a different type of tax that Georgia levies annually on real estate assets as a percentage of the asset’s value.
Property tax in Georgia is almost negligible. Even if the value of your property is high, the maximum you will pay is one percent of its value — and in many cases the rate will be lower, ranging down to around one-tenth of a percent.
Income Tax on Real Estate in Georgia
Most Israelis who purchase real estate in Georgia do so in order to generate income from the asset. They can do this by renting the property out for long-term leases, receiving a monthly payment from tenants. Alternatively, they can offer the property as a short-term rental for tourists wishing to stay in a residential apartment during their visit to Georgia. Georgian law sets a flat income-tax rate of 20% on income received by a foreign national from real estate assets.
Selling a Property Tax-Free
Georgian law allows the sale of real estate without paying tax in certain circumstances. If an apartment is sold at a loss — that is, at a price lower than its original purchase price — no tax is payable. In cases where a profit is generated on the sale, Georgian law provides that if the apartment is sold within two years of the purchase date, the owner will not be required to pay any tax on the gain.
Capital Gains Tax
If a foreign national who owns an apartment in Georgia sells it at a profit, they will be required to pay capital gains tax. The tax is calculated only on the gain — that is, on the difference between the original purchase price and the sale price. In Georgia, this tax rate is a flat 5% of the profit.
Settling Tax Matters with the Georgian Authorities
Dealing with taxation is no simple matter — especially when the taxation involves a foreign country like Georgia. Settling tax matters related to real estate is critically important, because errors before the authorities of a foreign state can lead to severe sanctions. It is therefore advisable to obtain professional assistance from specialists — such as an attorney who is expert in Georgian law and Georgian taxation. Professional guidance can also save you money through correct and lawful tax planning.
