Georgian Residential Property: 5% Tax on Rent, Tax-Free Sale After Two Years and a Residence Permit Route

Most foreign readers approach Georgian property the same way: as a path to a residence permit. The USD 150,000 threshold gets named first, the apartment search gets framed around qualifying for residency, and the investment math comes second — if at all.

That sequence inverts the actual case for buying. The investment thesis leads. The residence permit follows.

Consider the tax profile in isolation. Personal income tax on residential rental income, when the owner claims no expense deductions, is 5% under the Tax Code. Capital gains on the sale of residential immovable property held for more than two years are exempt under the Tax Code — no Georgian tax on the gain when you exit. Government registration charges apply on the purchase and are paid separately.

The Georgian tax profile is simple: a flat 5% on residential rental income and no Georgian tax on the gain once you have held the property for more than two years. How that compares with your home market depends on your own country's rules — and if you remain tax-resident at home, your home country may also tax the rent and the gain.

Then the residency layer. Georgian property with a market value above USD 150,000 grounds a renewable short-term residence permit for the owner; the owner's spouse and children can apply for their own permits on the same basis.

This article walks through the three layers — yield, capital, residency — in the order that actually drives the decision.

The yield layer: 5% on rental income#

Georgian residential rental income is taxed at 5% personal income tax when the property owner claims no expense deductions against it (Tax Code Art. 81(2)). The 5% rate applies to gross rental income — no deduction for management costs, repairs, or financing — but the simplicity is the point. There is no separate property income tax bracket, no progressive rate scaling with rental volume, no deduction-and-allowance complexity. Five percent of the gross.

The 5% rate applies to letting living space for residential use — whether the tenant is an individual or a company or organisation housing someone there. Commercial lettings (offices, retail, industrial) fall under the standard 20% personal income tax on taxable income, with deductions allowed for actual expenses. For the typical foreign investor — buying a Tbilisi apartment to rent to long-term residents — the residential 5% rate is the operating regime.

The 5% rate applies when you claim no expense deductions against the rental income; a landlord who prefers to deduct expenses is taxed at the standard 20% on the net amount. For most residential landlords 5% is the simpler and cheaper route: 5% of gross rent is lower than 20% of net rent unless deductible expenses exceed three-quarters of the rent. Where the tenant is a company, the Revenue Service's landlord register comes into play for applying the reduced rate; we check that set-up for your letting. Filing runs annually: the income-tax return is filed, and the tax paid, by 31 March of the year following the tax year.

What the property actually earns depends on the district, the unit, the letting strategy and how well it is managed — verify rents and costs for the specific property rather than relying on city-wide averages. How short-term holiday lettings are taxed depends on how the activity is organised, so confirm that for your plan before relying on the 5% rate.

Annual property tax for individuals depends on family income. No property tax is due on buildings and apartments when the family's income in the previous year did not exceed GEL 100,000. Above that, the rate is set locally at between 0.8% and 1% of the property's market value (Tax Code Arts. 202(5) and 206(1)(a)). Land is taxed separately.

The capital layer: 0% on sale after two years#

Georgian Tax Code provides a full personal income tax exemption on capital gains from the sale of residential immovable property where the ownership period exceeds two years. There is no scaling, no bracket, no partial exemption — the exemption is structural and applies once the two-year hold threshold is met.

Sales of residential property before the two-year threshold are taxed at 5% personal income tax on the capital gain. The standard 20% personal income tax rate that would otherwise apply to capital gains is reduced to 5% for residential property under the relevant Tax Code provision. Sold within two years, the gain is taxed at 5% rather than the standard 20% applying to other categories of capital gain.

The combination — 5% rental income tax during the hold, 0% capital gains tax on the exit — means the foreign investor keeps the appreciation free of Georgian tax when selling after two years. After two years, Georgia takes no tax on the appreciation; whether your home country does depends on where you are tax-resident when you sell.

Whether there is a gain to keep is a market question, not a tax one: prices differ by district and building, and past movements are no guide to your hold. Base the decision on a valuation of the specific property, and treat the two-year exemption as what it is — Georgian tax on whatever gain you make falls to zero after two years.

The residency layer: property above USD 150,000 opens a residence permit route#

Once the investment case is made, the residency layer is genuinely a bonus rather than the headline. The mechanism is straightforward.

Foreign nationals owning immovable property in Georgia (excluding agricultural land) with an appraised market value above the equivalent of USD 150,000 in Georgian Lari qualify for a short-term residence permit issued by the State Services Development Agency (SDA). The permit is initially issued for one year and renewable one year at a time while you keep the property; keeping it does not require a fresh valuation. The owner's spouse and children can apply for their own short-term residence permits on the same basis; each application is assessed separately.

Property worth more than USD 300,000 can instead support a five-year investment residence permit, with a possible indefinite permit later; we confirm which route fits.

Two structural details matter for foreign buyers.

First, the market value must exceed the equivalent of USD 150,000. If you are combining more than one property to reach it, confirm how the application will be assessed before you buy.

Second, the market value set by a certified appraiser from a body accredited by the Unified National Body of Accreditation (Aliens Law Art. 15) — not the purchase price — is what counts against the threshold. You'll need that valuation report for the application, so commission it as part of the purchase.

Notably, the property residence permit does not by itself create Georgian tax residency. Georgian tax residency is established through 183 or more qualifying days in Georgia within a continuous 12-month period ending in the relevant tax year, or through the High Net Worth Tax Residency Programme, both of which sit separately from the property-based legal residence permit. A foreign property owner in Tbilisi can hold the Georgian residence permit, rent the property out, declare the rental income at 5%, and remain a tax resident of their home jurisdiction under that jurisdiction's rules. The legal residence permit and the tax residency status are independent legal categories.

Ownership#

Foreign nationals can own residential and commercial property in Georgia outright, on the same terms as Georgian citizens; the restriction that exists concerns agricultural land. Title is registered with the National Agency of Public Registry, and the registry record — ownership, encumbrances, registered details — is the first thing to check before you sign.

How to structure it#

For a foreign investor approaching Georgian property as a low-tax investment with residency as a bonus, the practical steps fall in a specific order.

First, set the investment thesis. Long-term residential letting, short-term letting with active management, or buy-and-hold for residency with rental as secondary income — each strategy maps to different districts, different property types, different management overhead and, for short-term letting, a tax treatment to confirm in advance.

Second, structure the letting to qualify for the 5% rental tax rate from day one: residential use, no expense deductions claimed and, where the tenant is a company, the landlord registration the Revenue Service requires. Commercial lettings fall under the standard 20% rate on taxable income.

Third, plan the two-year hold for capital gains exemption. Selling residential property held for more than two years carries zero personal income tax on the gain. Selling before two years carries a 5% rate (still substantially better than the 20% standard, but the two-year mark is the structural exemption point). Foreign investors planning around the capital layer should plan around the two-year horizon rather than shorter holding periods.

Fourth, document the residency layer if it's relevant. If the property's market value exceeds USD 150,000, the certified appraisal supports both the future residence permit application and the broader purchase documentation. The residence permit application itself runs separately through the State Services Development Agency (SDA) and requires the appraisal report among other documentation. The first application is filed while you are in Georgia, and you then request the residence card in person; we prepare and file the application under Power of Attorney.

Fifth, if your spouse or children may also apply, check the ownership position before you buy. The property route covers the owner's spouse and children, but each applies for their own permit; we can assist with their applications on request.

For most foreign investors, the answer reduces to: buy in a Tbilisi district that fits the chosen rental strategy, set up the letting for the 5% rate, hold for at least two years, and optionally apply for the residence permit if the threshold is met. We can carry out the purchase for you via Power of Attorney and advise on the tax position before you commit. Book a free consultation to check the tax position and the residence route before you buy.

Updated 16 October 2026: the annual property-tax section now reflects current law, and the market statistics and foreign-programme comparisons in earlier versions have been removed.

Read more about the property-based residence permit on the Residency pillar page.

See whether Georgian tax residency fits your situation.

Check the tax position of a purchase before you buy.

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