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Warning: The Default Track is 20% (Expensive!)
If You Do Nothing - You Pay 20%!
The default tax track for foreign investors in Georgia is "General Income" - where the tax rate is 20% on gross rental income. This is like throwing money away.
Painful Example:
- • Monthly rental income: $1,000
- • Annual income: $12,000
- • 20% tax: $2,400 per year
This does not have to happen. Read on.
The Solution: Residential Track - 5%
Residential Track - The Recommended Legal Option
This track is specifically designed for residential rental income (regardless of short/long term). Tax rate: 5% only on gross rental income.
This is the legal, recommended, and safe track for any foreign investor renting apartments in Georgia.
Default Track (20%)
- • Annual income: $12,000
- • Tax rate: 20%
- • Total tax: $2,400
- • Net remaining: $9,600
Residential Track (5%)
- • Annual income: $12,000
- • Tax rate: 5%
- • Total tax: $600
- • Net remaining: $11,400
- Savings: $1,800/year!
How to Switch to Residential Track?
- Register for a Tax ID with Georgian Revenue Service
- Select the "Residential Rental Income" track
- Report income annually
- Pay 5% - done!
We assist with the entire process - it takes one hour and costs approximately $200 through us. Also read about Georgia Purchase Tax and VAT for the complete tax picture.
The Trap: Micro-Business Track (1%) - Prohibited!
"Micro Business" (1%) - Sounds Great, But Illegal for Rentals!
Georgian tax system has a track called "Micro Business" where you pay only 1% on turnover. Sounds amazing, right? Not for passive rental income!
This track is only for active businesses with employees, offices, daily operations, etc. Renting apartments = passive income = prohibited by law!
What Happens If You Get Caught?
- ×20% penalty on all income - retroactively (!) up to 3 years back
- ×Back taxes (difference between 1% and 5%) + interest
- ×Business closure and ban from micro-business registration
- ×In severe cases - criminal prosecution for tax evasion
Property Tax: Depends on Your Global Income
In addition to rental income tax, there is also annual property tax on property ownership. Good news: Most investors pay nothing!
How Property Tax Is Calculated
Property tax rate depends on your global income (from all sources worldwide, not just Georgia):
Complete property tax exemption!
Very low tax on property value
Still low by international standards
Practical Example:
- • Property value: $150,000
- • Your global income: $50,000/year
- • Property tax rate: 0.2%
- • Annual property tax: $300 (!)
That is only 0.2% of the value - a nominal amount compared to municipal taxes in many countries.
Summary: Georgia Tax Tracks
| Track | Tax Rate | Legality | Recommendation |
|---|---|---|---|
| Default | 20% | ✓ Legal | ✗ Too expensive |
| Residential | 5% | ✓ Legal | ✓ Recommended! |
| Micro Business | 1% | ✗ Illegal for rentals | ✗ Penalty risk! |
| Property Tax | 0-1% | ✓ Required | Depends on income |
For Israeli Residents
As an Israeli tax resident, you must report foreign rental income to the Israeli Tax Authority. The Israel-Georgia tax treaty prevents double taxation - Georgian taxes paid can be credited against Israeli tax liability. Consult with a tax professional for proper reporting.
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Legal Disclaimer
The data and returns presented are for illustrative purposes only and are based on past performance or market estimates. This information should not be considered as a guarantee of returns, investment advice, or a substitute for individual tax advice. Real estate investment involves risks, including regulatory changes, currency fluctuations, changes in property condition, and local market conditions. RealFix does not guarantee the displayed returns and is not responsible for losses resulting from investment. It is recommended to consult with a Certified Public Accountant and tax consultant before making investment decisions. E&OE.
