The relatively low property ownership taxes in Georgia often surprise many expats. Taxes related to property ownership are one of the most frequently discussed topics during our free consultations. This article details the taxes and other costs you need to know about when buying property in Georgia.
Stamp Duty / Purchase Taxes: Interestingly, there is no Stamp Duty or equivalent tax when purchasing real estate in Georgia. Aside from the property's purchase price, other associated costs are minimal.
Registering a property costs only ₾50-200 GEL ($20-80 USD), depending on the processing speed you choose. There are no hidden fees.
Annual Property Tax: Annual property tax in Georgia varies by municipality. According to Chapters XXIX & IX of the Tax Code of Georgia, the maximum property tax is 1% of the appraised property value. Often, it is much lower, depending on the municipality and your annual household income.
Households with annual incomes below GEL 40,000 are exempt from annual property tax. For incomes between GEL 40,000 and GEL 100,000, the tax ranges from 0.05% to 0.2% of the appraised value. For incomes above GEL 100,000, the rates range from 0.8% to 1%.
Capital Gains Tax (CGT): If you sell your property within two years of purchase, a 5% income tax on capital gains applies. There is no capital gains tax if you sell after two years.
For off-plan properties, you are not considered the official owner until the developer hands over the property to you. For CGT purposes, ownership starts when your name is registered on the property extract.
Rental Income Tax: Rental income is taxed at the standard rate of 20%. However, if you register as a landlord, you pay only 5% tax on your gross rental income from residential lettings, but 20% on commercial lettings. Unregistered landlords pay the standard 20% personal income tax rate but can deduct expenses. There is no limit to the number of residential properties you can own to qualify for the reduced 5% tax rate as a registered landlord.
Legal Fees: Legal fees may include:
Due Diligence: Renewing the property extract, checking the owner's background, identifying property characteristics, and checking for legal defects. Typical cost is 300GEL.
Preparing/Reviewing Registration Documents: This includes deposit/pre-purchase and purchase agreements. Typical cost is 600GEL, but it may vary.
Representation Before the Seller: Negotiating terms, organizing payments, and property registration. Typical cost is 300GEL.
In-Person Assistance with Registration: Accompanying clients to the Public Service Hall, banks, or notaries and acting as a translator. Government fees for title transfer vary based on the processing time. Typical cost is 600GEL.
Power of Attorney (PoA): Drafted by a lawyer, translated to English, and notarized. Typical cost is 400GEL for a local PoA and 600GEL for a foreign PoA.
Legal fees can total up to 2000GEL depending on the services required.
Property Inspection & Appraisals: Though not common in Georgia, property inspections provide peace of mind, especially for expats. Costs vary based on the property's condition and size, ranging from 500GEL for a simple visual check to 1000GEL for a detailed inspection by a civil engineer.
Property appraisals by accredited and government-approved appraisers cost around 100GEL and are typically completed within 24 hours. These appraisals are necessary for property valuations required for residency through property investment programs.
Sales Agent Fees: Sales agent fees, typically 3% of the purchase price, are the largest cost incurred by purchasers. While paid by the seller, they are often included in the purchase price, representing a hidden cost.
Our Real Estate Purchase Assistance services aim to provide comprehensive support, exceeding the services of any sell-side agent in Georgia, with full alignment to your interests and legal backing.
Conclusion: When investing in Georgia, understanding the taxes on property is crucial. The costs of purchasing property in Georgia are relatively low compared to other jurisdictions. It is essential to be aware of all associated costs before proceeding with any investment.
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