Renting out an apartment or house in Georgia is, under the Georgian Tax Code, income from economic activity: the Code explicitly lists income from property granted under leasing, usufruct, lease, rent or any similar form among such income. At the same time, the law grants residential letting a preferential regime: income received by an individual who rents out residential space to an organisation, legal entity or individual for residential purposes, and who does not claim deductions against that income, is taxed not at the general 20 percent rate but at 5 percent. If you let your home for short periods and are not registered as a VAT payer, the law offers an additional option — a fixed income tax regime. Below we explain how each rule works, which deadlines and thresholds come with them, and what an annual tax package for a landlord on Legal.ge includes.
The 5 Percent Rate — Who It Covers and How It Works
The first part of the rate article of the Tax Code taxes a natural person's taxable income at 20 percent in general, while the second part carves out the renting of residential space: income of an individual from renting out residential space to an organisation, legal entity or individual for residential purposes, where that individual does not apply deductions against this income, is taxed at 5 percent. In practical terms, the choice of rate is in your hands: the 5 percent rate applies when you deduct no related expenses and pay a low flat percentage on the entire amount; if deduction-based taxation happens to be more favourable, the general 20 percent rule remains available, although for a typical apartment's rent level the deductions rarely justify that choice.
Note that the 5 percent rate concerns precisely residential-purpose letting. If the same individual also earns income from other, non-residential property, that income is taxed under its own rules and should not be mixed up in the annual reporting — this is exactly where a tax consultant's work begins. The Tax Code also empowers the Minister of Finance of Georgia to establish the procedure for maintaining a register of persons renting out residential space and the rules for tax preferences for such lessors, so the administrative details of reporting evolve over time and should be re-checked every year.
The Fixed Tax on Short-Term Letting — Conditions and Rate
The second, special regime covers the short-term granting of your own dwelling — including daily rentals. Under the transitional provisions of the Tax Code, until 1 January 2028 an individual carrying out the activity classified under code 55.2 of the National Classifier of Types of Economic Activity — the short-term granting of a dwelling in his or her ownership — is, upon application to the tax authority, taxed with a fixed income tax, provided two conditions are met: first, the person is not voluntarily registered as a VAT payer, and second, within any continuous 12 calendar months the total amount of operations in this activity does not exceed 100 000 GEL.
The fixed rate is set in the Code itself: it is determined per object of taxation — a room — and amounts to 10 GEL per 1 square metre per calendar month. The object of taxation is precisely the area of the dwelling intended for short-term granting. The Government of Georgia is authorised, taking into account the location and/or seasonality of the object and upon the mediation of a local self-government body, to reduce or increase this rate — so the effective rate at a particular resort or region may differ from 10 GEL, and this must be verified when planning each tax year.
Payment Deadlines and the Procedure for Switching to the Fixed Tax
The fixed tax is charged quarterly by object of taxation and is paid: for the period from 1 January to 31 March inclusive — no later than 15 April; from 1 April to 30 June inclusive — no later than 15 July; from 1 July to 30 September inclusive — no later than 5 October; and from 1 October to 31 December inclusive — no later than 15 January of the following year. The law specifically notes that the charged fixed income tax is not subsequently subject to recalculation — which gives the landlord a basis for annual budgeting.
Switching to the fixed tax takes place upon the taxpayer's application — no one is forced into this regime. The taxation period may cover either a full calendar year or one or more calendar months, which need not be continuous: for seasonal rentals you may elect this regime for the summer months only. The procedure for the transition and for tax reporting is determined by the Minister of Finance of Georgia, so the formal details of the application are set by ministerial order.
Advantages and Limitations of the Fixed Tax
During the period of taxation with the fixed income tax the law grants the landlord several meaningful reliefs: a person hired in connection with the short-term granting of a dwelling is exempt from income tax, and accordingly the granting person — from the tax agent obligation; within this regime no other income tax exemptions are applied; and the person is also relieved of the obligation to use a cash register. Moreover, during the fixed-tax period the short-term granting of a dwelling by the individual is not treated as a VAT-taxable operation at all — meaning the question of VAT registration does not arise for this income.
If you have yourself taken the object under lease and use it in the same kind of activity, the law regulates subletting as well: a lessee receiving income from the short-term granting of a dwelling is exempt from profit/income tax on that income, a person hired in connection with it — from income tax, and the lessee — from the tax agent and cash register obligations. Bear the limitation in mind too: the fixed regime covers only the activity classified under code 55.2 of the national classifier, and if you exceed the 100 000 GEL threshold over 12 months and become a VAT payer, the regime no longer applies.
Property Tax and the 100 000 GEL VAT Threshold
Renting out an apartment is not exhausted by income tax. The annual property tax rate for a natural person is differentiated by the family's annual income: for families with income below 100 000 GEL it is no less than 0.05 and no more than 0.2 percent of the market value of the taxable property, while for families with income of 100 000 GEL or more — no less than 0.8 and no more than 1 percent. Rental income counts as income from economic activity and is included in the family income, so a successful rental year may be exactly the factor that moves the family into the higher band.
The second critical threshold concerns VAT: if you are not on the fixed-tax regime and the total amount of your VAT-taxable operations over any continuous 12 calendar months exceeds 100 000 GEL, the law obliges you to apply to the tax authority for VAT registration no later than 2 working days from the day of exceeding, and the payer's obligations arise from the very operation by which the threshold was exceeded. Monitoring the two thresholds — income and VAT — together throughout the year is precisely the work an annual package is built for.
Frequently Asked Questions
Below we answer the questions we hear most often at consultations about the tax on renting out an apartment.
How is ordinary, long-term apartment rental taxed?
If you rent out residential space to a natural or legal person or an organisation for residential purposes and do not claim deductions against that income, the income is taxed at 5 percent. The fixed-tax regime, by contrast, concerns only the short-term granting of a dwelling — these are two different situations, and mixing them up in a declaration leads to errors.
How much is the fixed tax on short-term letting and when must it be paid?
The rate is 10 GEL per 1 square metre per calendar month, and payment deadlines are quarterly: 15 April, 15 July, 5 October and 15 January of the following year. The Government may reduce or increase the rate by location and seasonality upon a self-government body's mediation, so the effective rate for a specific object must be verified separately.
My short-term letting income will exceed 100 000 GEL — what should I do?
If the condition of the fixed-tax regime is breached and the total of operations over any continuous 12 calendar months exceeds 100 000 GEL, you no longer benefit from that regime. For VAT purposes, if you are not on the fixed regime and your taxable operations exceeded the threshold, you must apply for registration no later than 2 working days from the day of exceeding — delay here is where sanctions begin.
Does rental income affect property tax?
Yes. The property tax rate for a natural person is differentiated by family income: below 100 000 GEL the rate is 0.05 to 0.2 percent of the market value, and at 100 000 GEL or more it rises to 0.8 to 1 percent. Rent is economic-activity income and counts toward that total.
Can I elect the fixed tax for the season only?
Yes. The fixed-tax period may cover a full calendar year or one or more calendar months, and these months need not be continuous. The switch is made upon application, while the administrative procedure for the transition and reporting is determined by the Minister of Finance.
How We Help on Legal.ge
On Legal.ge you are served by a tax law specialist who, within the landlord's annual package: reviews your objects and advises on the choice between the 5 percent and fixed regimes; prepares the application for switching to the fixed tax and tracks the quarterly deadlines; builds the annual tax calendar; prepares and submits the income tax declaration; and monitors the property tax band and the 100 000 GEL VAT threshold. We can meet in the office or online — book a consultation and receive a tax plan calculated for your objects.