At Legal Sandbox Georgia, our Investment Advisory service bridges the gap between financial ambition and legal reality. We begin by defining the investor's core strategy, distinguishing between "Passive Income" (long-term buy-to-let, commercial leasing) and "Active Income" (speculative flipping, development). This distinction is critical not only for financial planning but for determining the appropriate legal structure—whether to operate as an individual taxpayer utilizing the preferential 5% rental income tax regime or to incorporate as a Limited Liability Company (LLC) under the Law on Entrepreneurs for larger commercial operations. Our initial analysis includes a comprehensive risk profiling to ensure compliance with Georgian Anti-Money Laundering (AML) regulations and verification of the source of funds, which is a prerequisite for any significant transaction in the Georgian banking sector.
The core of our service is advanced Financial Modeling. We utilize sophisticated Excel-based proprietary models to generate detailed forecasts for Return on Investment (ROI), Internal Rate of Return (IRR), and Net Operating Income (NOI). Unlike standard market brochures, our models integrate "hidden" legal and fiscal costs often overlooked by foreign investors. These include property transfer fees, notary costs, annual property taxes (typically 1% of the property value), and the specific tax liabilities associated with capital gains. We analyze both foreign and local market trends to stress-test these models against currency fluctuations (GEL/USD exchange risks) and changes in the National Bank of Georgia’s refinancing rates, providing a realistic Cashflow forecast that accounts for market volatility.
Finally, we conduct a rigorous Scenario Analysis for both short-term and long-term horizons to determine the precise Payback Period and Yield. For short-term strategies, such as flipping, we calculate profitability based on the 20% Income Tax on the difference between purchase and sale price. For long-term holds, we factor in the critical exemption under the Tax Code of Georgia, where the sale of a residential asset owned for more than two years is exempt from income tax. We also evaluate non-monetary returns, such as eligibility for Investment Residence Permits (thresholds of $100,000 and $300,000), integrating these legal benefits into the overall value proposition of the investment portfolio.
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