Legal issues

Buying real estate takes place by concluding an appropriate agreement between the seller and the buyer in 3 copies and in 2 languages: 1 in Georgian and 1 selected by the non-resident buyer (English, Russian, French, etc.).One of the three copies is sent to the seller and two to the buyer, one for personal use, and one copy that is needed to register property rights.The presence of the buyer is not required when signing the contract. This can be done by an intermediary, which requires notarized power of attorney and representative's passport.A copy of the passports of the participants in the transaction is added to the agreement as an attachment, and the name of the investor, passport data, place of registration, and his citizenship are also added.

The purchase and sales agreement itself are registered and executed through the territorial division of the House of Justice. After completion, the payment for the purchased property is transferred to the seller. Private homeowners prefer to receive payments for the property in cash (most often in dollars) while developers receive their payments by bank transfer in the national Georgian currency, the Lari (GEL).Payment methods, terms, and the amount of the payment are prescribed in the contract for the sale and purchase of real estate in Georgia.Before the conclusion of the contract, the investor can check all the information about the property in the public register. An extract in electronic form can be obtained by submitting an application and a copy of an identity document to the House of Justice.The extract from the register has a unique international barcode, which guarantees the authenticity of the information. Therefore, this document does not have to be notarized. This has been possible since 2017 after the introduction of blockchain technology into the cadastral system, which minimized the possibilities of fraud and falsification of real estate documents.This document will indicate:

• Information about the owner of the property
• Whether the property was or is under arrest
• Whether there is a mortgage on the presented property
• Information about burdening, encumbrances or alienation

The quick and transparent process of registering property rights takes 1-4 days. Registration of real estate and the conclusion of a "sale and purchase" agreement in Georgia only requires a passport.
Purchased real estate in Georgia can be registered for both an individual and legal entities. Registration of the property rights takes place in the territorial House of Justice on the basis of a "sale and purchase" agreement and confirmation of payment to the seller.
The amount of the cost of registration of property rights depends on the timing.Familiarize yourself with the necessary documents for each type of property:

When buying real estate in Georgia, only the state fee is paid at the time of registration of the purchase and sale agreement at the House of Justice.

Property tax in Georgia is differentiated depending on the total family income and applies to tax residents of Georgia, that is, to individuals registered as taxpayers with the tax authorities of Georgia.
It should be noted that the tax on property of individuals also includes construction in progress, a building or part of it.
The property tax of an individual is calculated based on a declaration filed with the tax authority. The deadline for filing a declaration in Georgia is no later than November 1, payment is made no later than November 15 of the calendar year.
An individual files a property tax return if that person's family income exceeds GEL 40,000 ($ 13,880) in the previous calendar year.
The annual tax rate on the taxable property of an individual is differentiated according to the income of the taxpayer's family during the tax year and is determined as follows:

• to 100 000 GEL (34700 USD) — from 0,05% to 0,2%*
• from 100 000 GEL (34700 USD) and more from 0,8% to 1%*

When selling a property, the owner of the property also pays income tax in the amount of not more than 5%. However, this tax applies only to tax residents of Georgia.

Provided that the object passes into the ownership of the closest relatives (I and II degrees of relationship), it will not be taxed at any value.
Also, the similar process of donation and inheritance of property to relatives of III and IV degrees of kinship will not be taxed if its market value does not exceed 150,000 lari (50,000 dollars).

Taxation of local businesses is also transparent and today in Georgia there are the following taxes for legal entities:

• Income tax - 15%
• VAT - 18%
• Import tax - 0% / 5% / 12% depending on the product
• Excise - set depending on the type of goods and services (tax rates are specified in article 188 of the Tax Code of Georgia)
• Property tax - up to 1%

The cost of utilities in Georgia is considered relatively low compared to other countries. All bills can be easily paid by bank transfer.

The tariff per kilowatt-hour ranges from 0.12 to 0.14 GEL, depending on the voltage and whether the payer is exempt from VAT. The average monthly electricity bill for two people living in an apartment and spending most of the day at home is about 25-30 lari ($ 8-10).

Central water supply in Georgia so several private companies are responsible for the supply of water with the largest being GWP. There are two tariff options:

• By the meter (1 cubic meter = 0.2655 lari)
• By the number of people registered in the apartment (1 cubic meter = 3.15 lari per month per person)

This is paid by the meter. One of the largest companies is Tbilisi Energy with a consumer tariff ranging from 0.39 to 0.46 lari per cubic meter. (depending on whether the homeowner is exempt from VAT). From May to September-October heating is not required due to the climate.
During these months gas is consumed only for cooking and heating water and will cost about 15 lari ($ 5) per month for a family of two.

There is no central heating in the country. However, in most new buildings a central heating system is available. Heating of the apartment might only be required in the winter months.
Living in an apartment of 60-70 sqm, with 2 people living there in winter, the cost is about 100-120 lari ($ 33-40).

Unlimited 20 Mbit / s costs about 30 GEL ($ 10) per month and for telephone subscriptions, the prices are about 4 to 5 GEL ($ 1.3 to $ 1, 7).

Fixed rate of 2.5 GEL per person per month. The bill depends on the number of people registered in the apartment.

These costs differ for each complex. Always ask the developer to indicate a price for these costs.

For serviced apartments, extra expenses apply in the form of service costs. These usually are for the cleaning and upkeep of the building, cleaning of the communal areas, and upkeep of the yard and other amenities of the complex. The average price for these services is about $1 for each sqm of the size of your apartment and are in most cases paid per month.

With an ever-growing tourist industry and steady economic growth, there are many options for those wanting to receive a passive income by investing in real estate. In most cases, buyers purchase first-line studios with sea views in apart-hotels run by international hotel brands.The return on investment in apartments during the construction phase varies from 10 to 15% per annum, but since new apartment complexes appear constantly in Georgia, an important parameter here is the liquidity of the object. Usually, developers overestimate the profitability of the rental business, up to 25% per annum. However, the real figures, taking into account the correctly chosen investment object, are 8-12% per annum.

There is a growing industry of property management companies that, depending on the agreement, carry out a variety of tasks.
Service options offered:

• Search for clients for long-term or daily rent
• Solving all legal and organizational issues
• Booking an apartment, check-in, and check-out of the tenants
• Organization of cleaning of the living space, purchase of consumables
• Full service of apartments and common areas
• Maintenance and depreciation of the apartment
• Timely payment of the utility bills
• Other questions by individual agreement with the owner

You can manage the booking of your room with the help of an international management company, a developer's management company, and a local management company. All of them constantly provide reports on the rental of apartments.
A private property management company offers management professionalism carried out by experts. For developers, this is a secondary business. Therefore they can not provide the same expertise compared to companies for which this is their core business.The cost of real estate trust management services is 40% of the rental rate. They include absolutely all expenses for housing maintenance. The owner can only receive a net profit of 60% of the rental amount, without worrying about the wear and tear of the apartment, property damage, and other nuances.