The Taxpayer and the Object of Property Tax
Property tax is a recurring obligation of every owner of real estate, and planning the expense begins with article 201 of the Code. The taxpayers are: a resident enterprise or organization — on assets recorded as fixed or investment assets, on unmounted equipment, unfinished construction and property leased out; a non-resident — on property located in Georgia, including property transferred under lease or usufruct; and a natural person — on real estate in ownership, including unfinished construction, as well as yachts, helicopters, aircraft and light automobiles. A special rule concerns property registered in the name of a deceased person: the taxpayer is the person holding the property in possession or use.
The definition of the object carries further detail: an enterprise is also a payer on property acquired as security for a contractual obligation and on property acquired at auction or otherwise in the enforcement of a monetary claim; a natural person — also on property received by lease from a non-resident. Property tax is thus not always a function of ownership alone: it follows possession and use as well, and on a deceased person's property it is precisely the actual user who answers for it.
The computation of the annual rate has its own detail: for property leased out, the value at the moment of transfer is taken, and in subsequent years — the residual balance value the property would have had absent the lease. Where a market price is applied, interest accrues on the amount charged on the difference from the 30th day after delivery of the tax demand, and that difference is not treated as a deduction either.
Rates for Enterprises
Under article 202, the annual rate for an enterprise is set at not more than 1 percent of the taxable value — the average annual balance residual value. For older assets the Code applies special coefficients: the value of assets received before 2000 is tripled, of those received between 2000 and 2004 — doubled, and of those received in 2004 — multiplied by one and a half. Recording by the revaluation method with audited statements removes these coefficients, but such statements may be used for only 4 years. For a leasing company, the annual tax on leased property is set at not more than 0.6 percent of the initial balance value at first lease. The tax authority may, at an inspection, determine the taxable value at market price where it exceeds the book value — and that price then applies for the following 3 tax years.
Rates for Natural Persons
For a natural person the rate is differentiated by the family's annual income: for families with income up to 100,000 lari it is at least 0.05 and not more than 0.2 percent of the market value of the taxable property, and where income is 100,000 lari or more — at least 0.8 and not more than 1 percent. The concrete rate in each municipality is set by local decision, so property expenses must always be verified with the particular self-government. The principal ground for exemption — limiting the preceding year's income to 40,000 lari — fully relieves property other than land under article 206.
Computation and Payment
Article 205 governs the procedure: the tax period is the calendar year. An enterprise files the declaration by 1 April at the latest and, by the same date, pays the current instalment in the amount of the preceding year's annual tax; on land the tax is paid by 15 November. Where the expected liability decreases by at least 50 percent compared with the previous year and the taxpayer notifies the authority by 1 June, the current instalment may be reduced or not paid. The tax of a natural person is computed by the tax authority itself, while the declaration is filed by 1 November. An organization in liquidation notifies and files the declaration within 5 working days of registration of the dissolution. Observing the deadlines is essential to avoid interest.
Where the rate changes, the current instalment is paid at the current year's rate; an organization existing only part of the year pays proportionally, and an entity founded after the start of the year owes no current instalment — though next year it is determined by the full amount of the preceding year's annual tax.Frequently Asked Questions
What property of a natural person is taxed?
Real estate in ownership, including unfinished construction, a yacht, helicopter, aircraft and light automobile; in the case of economic activity — recorded assets as well.
How is the enterprise rate computed?
Not more than 1 percent of the average annual balance residual value, with coefficient-adjusted value for older assets; for leasing companies — not more than 0.6 percent.
What rate applies to natural persons?
Depending on family income: up to 100,000 lari — between 0.05 and 0.2 percent; above — between 0.8 and 1 percent of the market value.
When is the enterprise declaration due?
By 1 April; the current instalment equals the annual tax, and the tax on land is payable by 15 November.
How We Help on Legal.ge
The Legal.ge team helps with real estate tax planning: we compute the property tax for your assets and family income, verify the grounds for exemption and coefficients, plan the calendar of revaluation and declarations and support you before the tax authority. Contact us — calculated planning makes the property tax smaller than expected. Legal.ge.