VAT on Property in Georgia
VAT · TVA · Value Added Tax on Georgian Real Estate · Georgian Property VAT · Real Estate Sales Tax Georgia
Definition
In Georgia, Value Added Tax (VAT) on real estate is levied at a standard rate of 18%. It applies to primary market transactions where a property is sold by a developer or corporate entity. By law, the 18% VAT is always included in the developer's advertised price. Transactions on the secondary market between private individuals are exempt from VAT.
In detail
Overview of Value Added Tax in Georgian Real Estate
Value Added Tax (VAT) in Georgia is regulated under the Tax Code of Georgia and administered by the Revenue Service (RS.ge). In the context of real estate, VAT applies primarily to new construction projects, commercial property transactions, and development services rendered by business entities.
Primary vs. Secondary Market Taxation
- Primary Market (Developer Sales): When a corporate developer or registered business entity sells a newly constructed residential or commercial unit, the transaction is subject to the standard 18% VAT rate.
- Secondary Market (Private Resales): Sales of real estate between private individuals who are not registered as VAT payers are exempt from VAT.
Developer Pricing Transparency
Under Georgian consumer protection and tax legislation, developers are legally required to present gross prices to prospective purchasers. Consequently, any advertised price per square meter or total unit cost from a residential developer always includes the 18% VAT. Buyers purchasing directly from a developer do not need to calculate or add an additional 18% tax on top of the contracted sale price.
Commercial Properties and Tax Offsets
For commercial real estate (e.g., office spaces, retail, warehouses), transactions conducted between two VAT-registered corporate entities are also subject to 18% VAT. However, in commercial contexts, the purchasing entity can generally offset or recover the input VAT against its operational VAT liabilities, subject to standard Georgian corporate tax rules.
Input VAT Non-Reclaimability for Residential Buyers
Individual residential buyers (whether foreign citizens or Georgian nationals) purchasing a home for personal use or residential lease cannot reclaim the 18% VAT component included in the purchase price. The VAT paid forms part of the unrecoverable acquisition cost of the asset.
Georgian context
In Georgia, tax administration is fully digitized through the Revenue Service portal (RS.ge) and integrated with the National Agency of Public Registry (NAPR). Georgian law mandates that advertised developer prices must explicitly include all statutory taxes, ensuring buyers face no hidden tax add-ons at closing. Because Georgia does not impose a property transfer tax or stamp duty on real estate purchases, the 18% embedded VAT on new builds represents the primary transactional tax risk for primary-market buyers.
Real example
A buyer purchases a newly constructed apartment in Tbilisi directly from a registered developer for an advertised price of $100,000 USD (equivalent in GEL at the central bank exchange rate). Because the developer's public quote must include VAT by law, the total contract price remains $100,000 USD. Behind the scenes, the developer remits $15,254.24 USD (18% gross calculation: $100,000 / 1.18 × 0.18) in VAT to the Georgian Revenue Service, while the net base sales value is $84,745.76 USD. The buyer pays $100,000 USD in total. By contrast, if the same buyer purchases an existing apartment from a private individual for $100,000 USD on the resale market, 0% VAT applies.
Common mistakes
- ×Assuming that 18% VAT must be added on top of a developer's advertised purchase price.
- ×Believing that secondary market (resale) property transactions between individuals are subject to VAT.
- ×Expecting individual residential real estate investors to be eligible for a VAT refund from the Revenue Service.
- ×Confusing the 18% Value Added Tax with local annual property ownership tax or capital gains tax.
Frequently asked questions
Is VAT added on top of the developer's quoted property price in Georgia?
No. Georgian law requires developers to display and quote prices inclusive of the 18% VAT. The amount stated in your sales contract is the final gross price, with the developer responsible for remitting the embedded tax portion to the Revenue Service.
Do foreign investors pay VAT when buying a resale apartment in Georgia?
No. Property purchases on the secondary market between private individual sellers and individual buyers are exempt from VAT in Georgia.
Can I get a VAT refund if I buy a residential apartment in Georgia as an individual?
No. Individual buyers purchasing residential property for personal use or standard residential rental cannot reclaim or recover the 18% VAT included in the purchase price.
How does property VAT interact with the Georgian real estate residency threshold?
To apply for a short-term residence permit in Georgia based on real estate ownership, the property's total appraised market value must equal or exceed 150,000 USD. The total value determined by a certified appraiser reflects gross market value, which naturally incorporates any non-recoverable VAT paid on new developments.
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