Property-Related Taxes in Georgia

Georgia generally applies a territorial approach to individual taxation, under which foreign-source income received by resident individuals is exempt from Georgian income tax. Non-residents are subject to Georgian taxation on income arising from Georgian sources.

Income Tax

The standard personal income tax rate is 20%, although preferential rates apply to certain categories of income. In particular, income earned by an individual from renting residential property for residential purposes is taxed at a reduced rate of 5% of gross rental income, provided that no deductions are claimed against that income.

Corporate Tax

Georgia applies a 15% corporate income tax (CIT) under a distributed-profit system. Rather than taxing accounting profits as they are earned, corporate taxation is generally deferred until profits are distributed or certain other taxable transactions occur.

Accordingly, profits retained and reinvested by a Georgian company are generally not immediately subject to corporate income tax. The 15% rate applies to the grossed-up amount of distributed profits and certain deemed distributions and non-business expenditures.

Corporate Rental Income

Rental income earned by a Georgian company is therefore not generally subject to an immediate 15% tax simply because the rental income has been earned. Under the distributed-profit regime, rental profits retained within the company are generally taxed when subsequently distributed or otherwise used in a manner that triggers corporate income tax.

Different rules may apply to non-resident companies, particularly where Georgian property is held without a Georgian permanent establishment.

Capital Gains Tax

Georgia does not impose a separate general capital gains tax. For individuals, taxable gains are normally subject to the standard 20% personal income tax rate, unless a specific preferential treatment applies.

A 5% rate applies to taxable gains derived by an individual from the disposal of a residential apartment or house together with its attached land. Certain disposals may also qualify for exemptions depending on factors such as the length of ownership and the circumstances of the transaction.

For companies subject to Georgia's distributed-profit corporate tax regime, gains from the disposal of real estate generally form part of corporate profits and are taxed under the applicable corporate income tax rules when those profits are distributed.

Buying and Selling Taxes/Costs

Property Holding Tax

Individuals may be subject to annual property tax on Georgian property. For property other than land, the tax is generally calculated by reference to the market value of the taxable property and the taxpayer's annual family income.

Individuals whose annual family income does not exceed GEL 40,000 are generally exempt from property tax on qualifying non-land property.

Property Tax Rates

Individuals with annual family income of up to GEL 40,000 are generally exempt from property tax. Where annual family income exceeds GEL 40,000 but remains below GEL 100,000, property is taxed at a rate ranging from 0.05% to 0.20% of its market value. For annual family income of GEL 100,000 or more, the applicable rate increases to between 0.80% and 1.00% of the property's market value. The precise rate within the applicable range is determined by the relevant local authority.

Land Tax

Land is taxed separately from other property, and the applicable liability depends on the classification and location of the land.

For non-agricultural land, the statutory base rate is GEL 0.24 per square metre per year. This amount is adjusted by a territorial coefficient established by the relevant municipality, which may not exceed 1.5.

For agricultural land, base rates generally range from GEL 5 to GEL 100 per hectare per year, depending on the land category, quality and administrative location. The applicable rate may also be adjusted by a territorial coefficient of up to 150%.