Tax on selling a flat, house or car: what to do under Georgian law

What to do

1. The holding period decides everything. The gain from selling residential property (a flat or a house with land) owned for more than 2 years is exempt (Tax Code of Georgia, Art. 82). A car is exempt if held for more than 6 months from registration of the title (Art. 82). Any other asset is exempt if held for more than 2 years and not used in economic activity (Art. 82). Counting: the holding period runs from the date of the title document submitted for registration (Art. 82); the moment of sale is the date of the document transferring the title (Art. 82); for an inheritance or gift from a person of whom the seller is a first-order heir, the periods are added together (Art. 82).
2. If the period is not met, only the gain is taxed: gain = sale price minus purchase price (for a gift or inheritance, the market value at the time of receipt) (Art. 82). No gain means no tax.
3. Rate: the gain from selling residential property with land and from selling a car is taxed at 5% (Art. 81); other taxable income is taxed at 20% (Art. 81). Foreigners: a non-resident pays on the gain from selling property in Georgia (Art. 80).
4. Declaration and payment: the declaration is due no later than the 15th of the month following the sale (Art. 153), and payment is due by the same deadline (Art. 62). The National Agency of Public Registry must warn the seller of this obligation (Art. 153). Late declaration: up to 2 months carries a fine of 5% of the tax, longer carries 10% (Art. 274).
5. Risks: confirm the purchase price with the contract and payment records. Regular resale or business use removes the exemption for other assets.
6. Where to apply: Revenue Service (rs.ge); the Public Registry; Service Agency of the Ministry of Internal Affairs (for cars).
7. Evidence: purchase and sale agreements, registry extract with dates, documents on inheritance or gift and on market value, car registration certificate, payment records.
8. Traps: counting the holding period from the registry entry rather than from the date of the document; forgetting to add periods for an inheritance or gift from parents; applying 20% to a flat or car instead of 5%; missing the declaration deadline of the 15th.

Be sure to check

• exemption by holding period: residential property with land over 2 years; car over 6 months; other assets over 2 years outside business
• how the period is counted: from the date of the title document; periods are added for inheritance or gift from first-order heirs
• taxable gain = sale price minus purchase price (or market value when acquired free of charge)
• 5% for a flat and a car, otherwise 20%
• declaration and payment by the 15th of the following month; penalty for late filing