What Public Decision No. 143 Means for You
On 14 May 2026, the Ministry of Finance of Georgia issued Public Decision No. 143 to clarify personal income tax rules governing capital gains from real estate sales. This ruling introduces clear guidelines on applicable tax rates, holding period calculations, and criteria for identifying residential property.
Key Tax Rates and Exemptions
5% Reduced Rate: Applies to capital gains derived from the sale of residential apartments or houses, including their attached land.
20% Standard Rate: Applies to non-residential properties, including bare land, commercial spaces, and warehouse units. It also applies to sales of hotel rooms operated within hotel businesses and transfers of rights under preliminary purchase agreements.
Full Tax Exemption: Gains from selling a residential property held for more than two years are completely exempt from income tax. Temporary rental of the property or using it as a registered business address does not forfeit this exemption.
Commercial Exception: Systematic real estate trading or commercial development activities trigger the standard 20% income tax without access to the two-year exemption.
Holding Period and Cost Basis Guidelines
Self-Built Homes: The two-year holding period begins on the date ownership of the completed structure is officially registered.
Property Swaps: The clock starts when title to the new completed apartment is secured.
Inheritance: Holding periods of first-degree relatives can be combined with the seller’s ownership period to qualify for the two-year exemption.
Splits and Combinations: Split properties retain their original acquisition dates, while combined properties are evaluated separately for each underlying parcel.
Taxable Gain Calculation: Capital gains equal the sale price minus the original purchase price and documented capital improvement or renovation costs. For inherited or gifted properties, the cost basis is the market value at the time of receipt.
Eurofast’s Take
Public Decision No. 143 provides vital clarity for property owners and investors in Georgia. Confirming that lease agreements do not invalidate the 5% tax rate or the two-year exemption removes significant operational risk for individual landlords. However, the Revenue Service is increasing scrutiny on high-frequency transactions to reclassify continuous trading as commercial activity subject to the 20% rate. Property owners should review legal classifications, historical usage, and construction expense documentation prior to contract execution.
Eurofast assists individuals and international investors with tax compliance and transactional advisory across Georgia.
For any further information or personalised assistance, please contact us at [email protected]