Changes in Deadlines for Declaring and Taxing Surplus Income from the Sale of Property/Assets

An amendment to the Instruction on Tax Administration, approved by the Minister of Finance’s Order No. 996, came into force on January 1, 2025. This amendment introduces new rules for the declaration and taxation of surplus income earned by individuals from the sale of property/assets outside business activities.

Key Changes

Shortened Declaration Deadline: Individuals earning surplus income from non-business activities (sale of property/assets) must submit their personal income tax declaration by the 15th of the month following the sale. 

Previously, the deadline was April 1 of the year following the sale. This amendment significantly shortens the timeframe, requiring monthly declarations.

Taxation of Non-Resident Individuals- Non-resident individuals' surplus income will be subject to taxation only if the source of the income is Georgia

Updated Declaration Form- A revised personal income tax declaration form has been introduced in accordance with the amendment.

Practical Examples

To illustrate the application of the new regulations, the Instruction provides the following examples:

Sale of a Residential Property - If an individual sells a residential property, for example, in March that has been owned for less than two years, they must submit the tax declaration by April 15. The surplus income from the sale will be taxed at a 5% personal income tax rate.

Sale of a Commercial Property- If an individual sells a commercial property, regardless of the holding period, the surplus income will be taxed at a 20% personal income tax rate.

Impact on Taxpayers

Individuals must closely monitor their surplus income from property sales to ensure timely tax declaration and avoid penalties. Non-resident individuals may require additional tax analysis to determine whether their surplus income qualifies as Georgian-source income and is therefore taxable in Georgia.

Conclusion

This amendment introduces a major change in tax compliance by significantly shortening the declaration deadline and requiring individuals to proactively declare their surplus income from property sales.

Additionally, non-resident individuals must assess whether their income qualifies as Georgian-source income, thereby falling under Georgia’s taxation rules.