Owning property in Georgia can be a solid investment. However, as a property owner, it’s essential to stay on top of your tax obligations. This article provides a general overview of property taxes in Georgia for individuals.
What Is Property Tax and What Does It Apply To?
In Georgia, property tax applies to a wide range of assets held by individuals, which includes:
- Real estate (including unfinished construction)
- Passenger vehicles, yachts, helicopters, and airplanes
- Property received from a non-resident in a financial lease
If you’re engaged in economic activity (whether as an Individual Entrepreneur or simply as a natural person running a business), additional taxable assets include:
- Fixed assets
- Uninstalled equipment
- Property transferred in a financial lease
Failing to declare these taxable assets could lead to penalties. Consequently, this makes it essential to have a clear picture of your responsibilities.
How To Calculate Property Tax?
One of the key factors in determining your property tax rate in Georgia is your household income. Hence, you use this income, along with the property’s location, to determine the tax bracket your property belongs to.
Here’s a basic outline of the tax rates
- If your household income exceeds 100,000 GEL, your property tax rate will be between 0.8% and 1% of the market value of the property.
- If your household income is between 40,000 GEL and 100,000 GEL, the rate will be between 0.05% and 0.2%.
- If your household income is below 40,000 GEL, you are generally exempt from property tax, except for the tax on land.
The tax rates on land vary depending on the size of the land, its classification, and its location. The local municipality sets the rates, which means the rate can differ based on where your property is located. It’s important to note that worldwide income does not affect your tax liability on land. You have to pay the tax regardless of your household income.
Individual Entrepreneurs with Small Business Status: Special Provisions
If you’re an Individual Entrepreneur (IE) with Small Business Status (SBS), only 25% of your taxable income under the special 1% tax regime is considered for determining your household income when calculating property tax.
Example: If your taxable income under the SBS regime was 100,000 GEL, only 25,000 GEL is counted. Since 25,000 GEL is below the 40,000 GEL threshold, you would be exempt from property tax.
Definition of Worldwide Income: What Counts Toward Property Tax?
Generally, to determine your property tax liability, you need to consider your global income (any income earned in and outside Georgia). However, there’s an exception for Georgian citizens who are non-residents. In this case, non-resident citizens need to take into consideration only their Georgian-sourced income.
Importantly, Georgian tax law has a relatively narrow definition of a household (referred to as “family” in the Tax Code). It doesn’t extend to members of the same household who are otherwise related. For tax purposes, your household includes your spouse, minor children, and step-children, as well as parents, children, step-children, sisters, brothers, grandmothers, grandfathers, and grandchildren permanently living with the person while maintaining a common household.
Please note that not only your own global income but also the worldwide income of your household members will be taken into account for property tax purposes.
When and How to File Property Tax?
You can file your property tax through your Revenue Service portal.
Individuals have to file property tax by November 1st and pay it by November 15th of the year following the relevant tax year. For instance, if you purchase an apartment in 2024, you will owe property tax on it by November 2025.
Moreover, if you didn’t own your property for the full year, the tax will only apply to the months during which you owned the property.
Property Tax on Land
If you own land in Georgia, the property tax on land is calculated differently than for buildings or other types of property. The tax rate depends on:
- The size of your land (calculated in hectares)
- The classification of land
- A fixed annual tax set by the local municipality
Importantly, your household income is irrelevant when calculating tax on land. Whether you have generated income that year or not, you have to pay this tax.
Income Tax on Real Estate: Tax-Friendly Rules for Property Owners
Apart from property tax, real estate in Georgia can also generate income tax obligations—particularly if you’re renting out the property or selling it. Luckily, Georgia offers tax-friendly rules for real estate owners.
Foreign Property Investments: If you earn rental income from property located outside Georgia, that income is not taxable in Georgia. Similarly, if you sell foreign property, you won’t be taxed on the capital gains.
Capital Gains on Georgian Property: When you sell Georgian property, you may qualify for a full capital gains tax exemption if you’ve owned the property for more than two years. If you sell a residential immovable property before the two-year mark, you’ll still benefit from a reduced 5% tax rate instead of the standard 20%.
Rental Income from Georgian Property: If you rent out property in Georgia for residential use, you’ll only pay a 5% tax on your gross rental income. This applies whether you’re renting to long-term tenants or operating a short-term rental business like Airbnb.
Don’t Miss the Deadline – Get Help with Property Tax Filing!
With the property tax deadline of November 1st quickly approaching, it’s crucial to make sure you file your tax declaration correctly. Mistakes or missed deadlines can result in penalties, so if you’re unsure about your obligations, now is the time to seek expert advice.
Our team of tax professionals is ready to assist you with every aspect of your property tax filing. If you wish to proceed, Contact Us.
