Selling Real Estate and the Tax Under the Code
Income from the alienation of real estate is a taxable object for a physical person, and the tax side of this transaction is governed by Georgia's Tax Code: the law determines which types of income are exempt, who declares and by when, and when tax is withheld at source. The rate on alienation and the computation of the taxable object are established by the relevant provisions of the Code, while the foundation of this page consists of the norms governing exemptions, the declaration duty and the withholding rule. For a seller this means: when planning the transaction, it must first be determined whether the income falls within the exempt types, then — who bears the duty to declare, and finally — whether there is a withholder at source.
Exempt Types of Income
The following types of income of physical persons are exempt from income taxation, among others: state pension, state compensation, state academic and state scholarships, received grants, and certain other payments provided for by the budget. In the context of real estate, one specific exemption is particularly significant: the surplus received by a partner physical person through the transfer of real estate into ownership in exchange for a share, upon liquidation of an enterprise or reduction of its capital, is not taxed if more than 2 years have passed since the origination of the physical person's right of ownership in the enterprise's share. This means that a transfer occurring more than two years after acquisition of the share enjoys the exemption, while an earlier one is taxable — the time factor here directly determines the tax outcome. The exempt types also include benefit received from a state-founded non-entrepreneurial legal person within the framework of charitable activity, and benefit received from a charitable organization to finance the costs of treatment or medical services.