Capital gains tax: an English label for income tax on the gain from a sale
Capital gains tax, in Georgia, is the English name for income tax on the "excess income" (ნამეტი შემოსავალი) an individual makes by selling an asset: sale price minus purchase price, taxed at 5% for a home with its land and 20% for other assets, and exempt for a home owned for more than 2 years. No Georgian statute uses the words "capital gains tax".
The legal basis is the Tax Code of Georgia (publication 247 of 15 October 2026). Article 6(5) lists five national taxes: income tax, profit tax, VAT, excise and import duty; Article 6(6) adds property tax as the local one. A seller's gain sits in Chapter XI, income tax: the rate in Art. 81, the exemptions in Art. 82(1), the formula in Art. 82(4) and the return in Art. 153(12).
PwC's Worldwide Tax Summaries, in English, list the gain under "Capital gains" and give the 5% rate for an apartment (house) with its land plot or a vehicle.
Three Georgian words that English speakers mix up
| Georgian | Literal meaning | What it is | Who it concerns |
|---|---|---|---|
| საშემოსავლო გადასახადი | income tax | The tax itself, Chapter XI | Individuals (Art. 79) |
| ნამეტი შემოსავალი | excess income | The tax base on a sale, Art. 82(4)(ბ) | Sellers at a gain |
| მოგების გადასახადი | profit tax | 15% on distributed profit, Arts. 97(1), 98(1) | Enterprises |
A private sale is therefore described as საშემოსავლო გადასახადი on ნამეტი შემოსავალი. For the sale itself the Code uses მიწოდება (supply) generally and რეალიზაცია (sale) in the home exemption.
Profit tax is 15% of the distributed amount divided by 0.85 (Arts. 97(10), 98(1)); with 5% withholding on a dividend paid to an individual (Art. 130(1)), GEL 100 of profit pays GEL 15 + 5% x GEL 85 = GEL 19.25 (our arithmetic). A company owes no profit tax on a sale gain until it distributes the profit. Our guides to tax on company-owned property and buying through a company cover that side.
The rates and the words "more than 2 years"
Article 81(1) sets 20% "unless this Code provides otherwise"; Article 81(3) sets 5% for a residential flat (house) with its attached land plot, or a motor vehicle.
| Asset sold by an individual | Rate on the gain | Exempt when |
|---|---|---|
| Residential flat or house with its attached land | 5% | Owned for more than 2 years, Art. 82(1)(ვ.ა) |
| Motor vehicle | 5% | Owned for more than 6 months from registration, (ვ.ბ) |
| Other assets, such as commercial premises | 20% | Owned for more than 2 years and not used in economic activity, (ვ.გ) |
The home exemption reads: "2 წელზე მეტი ვადით საკუთრებაში არსებული საცხოვრებელი ბინის (სახლის) მასზე დამაგრებული მიწით რეალიზაციით მიღებული ნამეტი", the excess from selling a residential flat (house) with its attached land owned "for a period of more than 2 years". A flat sold exactly 2 years after the ownership document was drawn up has not crossed that line and is still taxed at 5%.
The (ვ.გ) bar lifts 2 years after economic use ended. What counts as a home follows Public Ruling No 143 of 14 May 2026, and Ruling No 175 of 8 June 2026 redefines the business test; our guide to capital gains tax when you sell property in Georgia applies both.
The legal formula for the gain, and the dates that drive it
Article 82(4)(ბ) defines the excess received on a sale in two variants. Under (ბ.ა) it is "სხვაობა აქტივის მიწოდების ფასსა და მასზე საკუთრების უფლების წარმოშობისას მისი შეძენის ფასს შორის": the difference between the supply price and the acquisition price when ownership arose. Under (ბ.ბ), for an asset received free of charge, the comparison is with its market price at the moment of receipt, so a gift or inheritance carries a starting value although nothing was paid; see market value.
Ruling 143 adds to the purchase price documented costs directly linked to acquiring, creating, completing or improving the asset that increase its value. Selling costs, such as an agent's commission, are not named, and we could not confirm that they reduce the gain.
| Question | Rule in the Code |
|---|---|
| Start of ownership | Date the ownership document was drawn up for registration |
| Divided unit | Keeps the original date |
| First-line heir or donee | Adds the deceased's or donor's period |
| Moment of sale | Date the document on which the transfer to the buyer is registered was drawn up |
A loss offsets only gains on the same type of asset in the same year, with no carry-forward (Art. 121(2)).
A monthly return, not the 1 April deadline
Article 153(12) requires an individual with a gain from selling property outside a business to file "არაუგვიანეს საანგარიშო თვის მომდევნო თვის 15 რიცხვისა", no later than the 15th of the month after the reporting month; under Art. 62(2) the tax is paid by the same date. Instruction 996, Art. 33-3(1), inserted by Order No 497 from 1 January 2024, repeats the rule, names non-resident individuals and prescribes form No II-04²; PwC's English summary gives the same deadline.
| Return | Covers | Deadline |
|---|---|---|
| Sale-gain return, form No II-04² | Excess income from one or more sales in a month | 15th of the following month, with payment |
| Annual income tax return | Income of the year, for example rent; refund claims where tax was withheld | Before 1 April of the next year (last day 31 March) |
So a flat sold on 20 June needs its return and payment by 15 July. Before registering the buyer, the registry must warn the seller of this duty (Art. 153(6)(ა)). Late filing costs 5% of the tax, or 10% after 2 months, and nothing if the tax is zero (Art. 274); late payment adds 0.05% a day (Art. 272).
A sale in Georgia is Georgian-source income (Art. 104(1)(ბ)), so non-residents pay too, and (ვ.ა) covers them; see tax resident.
Form II-04² and the other papers where the gain shows up
The return is titled "ფიზიკური პირის მიერ ქონების/აქტივის მიწოდებაზე საშემოსავლო გადასახადის დეკლარაცია", the income tax return on the supply of property or an asset by a natural person. Part III holds the calculation.
| Column | Content |
|---|---|
| 2 | Asset type: home with land, vehicle, land plot, share, other asset or excise refund |
| 3 | Identifier; for real estate, the cadastral code |
| 4 | Purchase price when ownership arose; documented later expenses, such as repairs, may be included |
| 5 | Supply price |
| 6 | Excess income |
| 7 | Relief |
| 8 | Income tax rate, printed as "(20%, 5%)" |
| 9 | Tax amount |
Column 3 links the return to the registry record through the cadastral code. Whether a return is needed when the whole gain is exempt is not settled in the texts we read.
- Sale and purchase agreement. Its price fills column 5 and its date is the moment of sale (Art. 82(4)(ა2)); the earlier purchase contract fills column 4.
- Registry extract. It names the document on which ownership was registered; we could not confirm the field name for its date.
- Listings. Prices only. "No capital gains tax after 2 years" holds for homes, and for other assets only without economic use.
Worked example: the Ministry's own case, then three variations
In the Ministry's example under Art. 33-3, a non-entrepreneur sold on 10 March 2024 a flat bought in 2023 and commercial space bought in 2020 and leased to a company, each bought for GEL 100,000. Because of the lease, the Ministry gave no (ვ.გ) relief despite more than 2 years of ownership; total tax GEL 7,000.
| Case | Rate | Excess income | Tax |
|---|---|---|---|
| Flat sold for GEL 120,000 | 5% | GEL 20,000 | GEL 1,000 |
| Commercial space sold for GEL 130,000 | 20% | GEL 30,000 | GEL 6,000 |
| Flat with GEL 8,000 of documented renovation (illustrative input) | 5% | GEL 12,000 | GEL 600 |
| Same flat, ownership document more than 2 years old | exempt | GEL 20,000 | GEL 0 |
Return and payment were due on 15 April 2024. In the renovation variant, invoices lift column 4 to GEL 108,000; filed on 10 May 2024, under 2 months late, that return costs a GEL 30 fine (5% of GEL 600); late-payment interest is GEL 0.30 a day, GEL 7.50 if paid on 10 May (25 days from 16 April). In the exempt variant, the proceeds also stay out of family income for property tax (Art. 202(7)(ა.ბ)). Timing is weighed in sell or keep renting.
Easily confused: profit tax, property tax, rent tax and proceeds
| Term | How it differs from the tax on a sale gain |
|---|---|
| Profit tax (მოგების გადასახადი) | Paid by an enterprise when profit is distributed |
| Property tax | A local tax charged every year for owning, not once for selling |
| Rental income tax | Also 5% income tax for homes, but on the annual return, before 1 April |
| Proceeds | The whole price; Art. 202(7)(ა.ბ) speaks of income from the sale, not the excess; only the excess is taxed |
Rent is covered under rental income tax. The 2-year exemption does not bind the seller's home country: treaties allocate taxing rights, as the UK treaty does in Arts. 13(1) and 23; see double taxation.
The term in five languages
| Language | Gain on a sale by an individual | Profit tax (company) |
|---|---|---|
| Georgian | ნამეტი შემოსავალი (საშემოსავლო გადასახადი) | მოგების გადასახადი |
| English | capital gains tax; legally, income tax on excess income | profit tax |
| Russian | налог на прирост стоимости | налог на прибыль |
| Hebrew | מס רווחי הון | מס רווחים |
| Arabic | ضريبة الأرباح الرأسمالية | ضريبة الأرباح |
Georgian legal documents, from the Code to form II-04², write ნამეტი შემოსავალი for the gain. In Hebrew and Arabic, dropping the word for "capital" names the company tax.
Mistakes and warning signs
- Calling it მოგების გადასახადი. That is the enterprise tax.
- Selling on the anniversary. Exactly 2 years is not more than 2 years.
- Diarising 1 April. A sale gain is due by the 15th of the next month.
- Taxing the whole price. Only the excess is taxed.
- Losing renovation invoices. Undocumented costs cannot enter column 4.
- Trusting 2 years on a leased shop. Economic use blocks (ვ.გ).
To be added by the team: scans to add: a blank form No II-04² with Part III marked; a redacted sale contract with price and date highlighted; a redacted registry extract showing the registration-basis document.
Working out the tax on a gain step by step
Name the asset type
Home with land, vehicle, or other asset.
Count the holding period
It must be more than 2 years, not exactly 2.
Check for business use
For other assets, economic use blocks the exemption.
Build the purchase price
Contract price plus documented improvement costs.
Apply 5% or 20%
Only to the excess, never to the whole price.
Diarise the 15th
Form II-04² and payment, the month after the sale.
Frequently asked questions
Does Georgia have a capital gains tax?
Not by that name. The gain is taxed as income tax (Arts. 81, 82).
What is the rate on a flat?
5% of the gain (Art. 81(3)); 20% for other assets.
Is a sale exactly 2 years after purchase exempt?
No. The exemption needs more than 2 years (Art. 82(1)(ვ.ა)).
How is the gain calculated?
Sale price minus purchase price (Art. 82(4)(ბ.ა)), plus documented improvement costs in the purchase price.
When is the tax due?
By the 15th of the month after the sale (Arts. 153(12), 62(2)).
Which form is used?
Form No II-04² (Instruction 996, Art. 33-3).
Is it the same as profit tax?
No. Profit tax is paid by enterprises.
Do non-residents pay it?
Yes. A sale in Georgia is Georgian-source income.
Sources
- Tax Code of Georgia, Georgian consolidated text, publication 247 of 15 October 2026 (accessed 2 November 2026)
- Tax Code of Georgia, official English translation, Legislative Herald of Georgia
- Public Ruling No 143 on income tax on the supply of assets by an individual, Ministry of Finance of Georgia, 14 May 2026 (accessed 2 November 2026)
- Public Ruling No 175 amending Ruling No 143, Ministry of Finance of Georgia, 8 June 2026
- Instruction on tax administration (Order No 996), Art. 33-3, consolidated to 9 October 2026
- Order No 497 amending the instruction on tax administration, Minister of Finance of Georgia, 26 December 2023, in force 1 January 2024
- Georgia: income determination, PwC Worldwide Tax Summaries
- Georgia: individual tax administration, PwC Worldwide Tax Summaries
Change log
- - Glossary entry published from the Tax Code of Georgia, Public Rulings No 143 and No 175 of the Ministry of Finance, the instruction on tax administration (Order No 996, Art. 33-3, inserted by Order No 497) and PwC Worldwide Tax Summaries.