Property tax is the only tax in Georgia whose rate is set by the municipal representative body, so planning starts well before the year begins. Article 201 of the Tax Code defines taxpayers and the object of taxation: a resident enterprise is taxed on assets recorded on its balance sheet, on uninstalled equipment and unfinished construction; a non-resident — on property located in Georgia; a physical person — on immovable property held in ownership, yachts, aircraft and light motor vehicles identified by a designated code. Property registered in the name of a deceased person is likewise taxed by its holder or user, unless used under a lease, rent or usufruct.
Rates and the Taxable Value
For an enterprise, the annual rate may not exceed 1 percent of the taxable value of the property. The taxable value is the average annual residual balance value, which — for immovable property — is increased threefold for assets acquired before 2000, twofold for those acquired in 2000-2004, and by 1.5 times for those acquired in 2004. The increase does not apply to an enterprise using the revaluation method with audited statements — such statements may be used for 4 years. For a leasing company, the annual tax on property given in leasing may not exceed 0.6 percent of the initial balance value at first transfer.
For a physical person, the rate is differentiated by household income: with income of up to 100 000 lari — from 0.05 to 0.2 percent of the market value; with 100 000 lari or more — from 0.8 to 1 percent. In the income of a small business status holder, 25 percent of the income taxed under the special regime is included, and for trading at a bazaar — 15 percent of the sale proceeds. The income calculation also carries exclusions: the value of property received by inheritance, gift or upon divorce is not counted, and neither is the income from selling a dwelling held in ownership for more than 2 years — these exclusions often change the rate bracket.
Reporting and the Payment Calendar
The tax period is the calendar year. An enterprise submits its declaration and pays the tax no later than 1 April of the following calendar year; the current payment — the previous year’s annual tax — is due by 15 June, and the tax on land by 15 November. If the expected liability decreases by at least 50 percent after exemptions, the taxpayer notifies the authority by 1 June and may reduce or skip the current payment; if the actual results do not confirm the reduction, interest is charged.
A physical person submits the declaration by 1 November and pays the tax by 15 November; the authority calculates the tax on the basis of the declaration. The liability is determined at the rate in force on 31 December of the tax year, and tax on property acquired during the year is computed proportionally to ownership. A newly founded legal person bears no current payment for the first year. A person in dissolution must give written notice and submit the declaration within 5 working days from the registration of the start of liquidation; when insolvency proceedings open, unfiled declarations are submitted within 15 days of the ruling taking effect.
Assessment at Market Price and Exemptions
During a tax audit, the authority may determine the value of taxable property at its market price: where the market price exceeds the balance value, the principal tax is charged on the difference, interest accrues only from the 30th day after delivery of the notice, and the market price is used for the following 3 tax years. As for exemptions, the property of a physical person (other than land) is exempt if the household’s income in the preceding year does not exceed 40 000 lari. Also exempt are an organization’s property other than land and property used for economic activity, public roads, power transmission lines and property used for medical activity.
Land exemptions deserve separate attention: agricultural plots of up to 5 hectares owned by a physical person as of 1 March 2004 are exempt, and the exemption extends to receipt by gift or inheritance in defined cases; recipients of newly reclaimed agricultural land are exempt for 5 years; the land of a permanent resident of a high-mountain settlement is exempt as well. However, the exemption does not extend to a plot transferred by lease, rent or usufruct: if the transfer occurs after the deadline, a declaration is filed and the tax paid by the end of the year.
Frequently Asked Questions
When planning property tax, the most frequent questions concern rates, deadlines and exemptions — answers follow.
What is the enterprise rate?
Not more than 1 percent of the taxable value; the balance value of older immovable assets is increased threefold, twofold or by 1.5 times.
How is a physical person’s tax computed?
By household income: up to 100 000 lari — 0.05-0.2 percent of the market value, above that — 0.8-1 percent. With income of up to 40 000 lari the property is exempt.
What is excluded from household income?
The value of property received by inheritance, gift or upon divorce, and income from selling a dwelling held for more than 2 years.
When does an enterprise pay?
Declaration and annual tax — by 1 April, current payment — by 15 June, land tax — by 15 November; in dissolution — within 5 working days.
What happens if land is leased out?
The exemption no longer extends to the transferred plot; if the transfer occurs after the deadline, a declaration is filed and the tax paid by the end of the year.
How We Help on Legal.ge
The Legal.ge team guides property tax planning through every detail: taxpayer status, base formation, income inclusion, exemptions and the calendar. Get qualified assistance with verifying calculations and preparing the declaration on Legal.ge.