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Estate Tax Planning

What income is included in the "Family Income" calculation?

It includes taxable income received by you and your family members living with you (salary, rent, dividends, etc.). It generally excludes inheritance from close relatives and loans.

When is the deadline for property tax?

Individuals must file the declaration by November 1st and pay the tax by November 15th of the year following the tax year (e.g., pay for 2023 in Nov 2024).

Does a foreigner pay property tax in Georgia?

Yes, if you own property in Georgia, you are subject to property tax rules, regardless of your citizenship, if your Georgian-source income triggers the threshold.

Is agricultural land taxed differently?

Yes, agricultural land has a fixed tax rate per hectare based on the region and quality of soil, and it usually applies regardless of the owner's income level.

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Estate Tax Planning: Optimizing Your Real Estate Portfolio

When managing significant family assets or a real estate portfolio, Property Tax is a major expense that burdens the owner annually. In Georgia, property tax for individuals depends on the family's annual income and the market value of the property. Incorrectly valued assets or failure to utilize tax exemptions can lead to unnecessary financial liabilities. Estate Tax Planning aims to legally optimize this burden and manage assets efficiently.

This service is particularly important for High-Net-Worth Individuals and those who own land plots or commercial spaces. Often, owners do not realize that property tax liability extends to unfinished construction or incorrectly value their property in declarations, leading to fines. Legal.ge offers the services of tax lawyers and auditors who will help you increase the tax efficiency of your real estate portfolio.

What Does Estate Tax Planning Cover?

Experts on Legal.ge ensure:

  • Audit of Tax Liability: Calculating family income (including salary, dividends, rent, etc.) to determine the applicable tax rate (from 0.05% to 1%).
  • Property Valuation: Determining the fair market value of assets. Often, market value is lower than the owner thinks, which reduces the tax.
  • Land Tax Optimization: Considering the specifics of taxing agricultural vs. non-agricultural land and utilizing exemptions (e.g., high-mountain status).
  • Structuring Lease and Usufruct: Transferring property to family members or companies in a form that reduces the overall tax burden.
  • Filing Declarations: Correctly filling out and submitting the annual property tax declaration by November 1st.

Common Scenarios and Real-World Examples

Property tax planning is relevant in the following cases:

  • Income Growth: A family's income exceeded 100,000 GEL. From this moment, their real estate is taxed at the highest rate (0.8%-1%). Revaluation of assets is needed to reduce the tax base.
  • Real Estate Investment: An individual buys apartments for rent. Tax must be paid as an individual. It might be better to transfer these assets to an LLC or use Individual Entrepreneur status.
  • Land Plots: Taxation of agricultural land differs from non-agricultural. Changing status or subdividing the plot can alter tax liability.

Georgian Legal Framework

Property tax is regulated by the Tax Code of Georgia (Articles 201-206):

Taxable property for individuals includes owned real estate (buildings/structures), unfinished construction, and yachts/planes. The tax rate depends on the family's annual income:

  • Income up to 40,000 GEL: 0% (Exempt).
  • Income from 40,000 to 100,000 GEL: 0.05% - 0.2%.
  • Income over 100,000 GEL: 0.8% - 1%.

Property tax on land is fixed and depends on location and land type, not income.

Step-by-Step Service Process

Working with a specialist on Legal.ge involves:

  1. Data Collection: Listing property and verifying family income.
  2. Valuation: Determining asset value by a certified appraiser (critical as market value is used in the declaration).
  3. Calculation: Precise calculation of tax liability.
  4. Optimization: Recommendations on asset structuring (e.g., transferring part to a family member with lower income).
  5. Filing: Submitting the electronic declaration.

Why Choose Legal.ge?

Property tax is not just a bill to pay; it is a manageable expense. Many taxpayers overpay because they do not use valuation methods or exemptions allowed by the code. Legal.ge gives you access to professionals who will help you save money while fully complying with the law and avoiding tax disputes. Manage your real estate wisely with Legal.ge.

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