Return on investment: everything a flat earned, set against everything it cost
Return on investment (ROI) is the gain from an investment divided by what it cost, shown as a percentage for a stated period; for a Georgian flat, the gain is rent after costs and tax plus the change in value, less the costs of buying and selling.
No Georgian law, National Bank of Georgia (NBG) regulation or Geostat method defines ROI for property (searched 1 November 2026). The Tax Code deals only with the parts it taxes: letting income (შემოსავალი), taxed under Art. 81(2), and the gain on a sale (ნამეტი შემოსავალი), defined in Art. 82(4)(b) as the sale price minus the purchase price. Public Ruling No 143 of 14 May 2026 counts documented costs of acquiring, completing or improving the asset that raise its value as part of the purchase price. So every quoted ROI is a private calculation, and its author chooses what to count.
The Corporate Finance Institute (CFI) gives the textbook version, "ROI = Net Income / Cost of Investment", and warns under the heading "The ROI Formula Disregards the Factor of Time". So the formula itself carries no period; in Georgian developer marketing the same letters can mean one year of rent, a contract-long total or a projection. Where returns come from is covered in our guide to investing in Georgian real estate.
Above and below the line: Georgian items in the ROI formula
| Item | Side | Georgian rule or figure |
|---|---|---|
| Rent collected | Gain | Taxed at 5% with no deductions when a home is let for living (Art. 81(2)); general rate 20% (Art. 81(1)) |
| Management, repairs, empty months | Gain, subtracted | Not deductible on the 5% route, so they lower ROI in full |
| Change in value | Gain | On paper until the sale |
| Agent on the sale | Gain, subtracted | Around 3%, paid by the seller |
| Tax on the sale gain | Gain, subtracted | 5% within 2 years (Art. 81(3)); exempt after more than 2 years (Art. 82(1)(f.a)) |
| Price and registration | Base | NAPR fee GEL 150 at the 4-working-day rate; no transfer tax or stamp duty |
| Finishing and furniture | Base | Often missing from an advertised ROI |
| Loan | Both | Own funds become the base; interest comes off the gain |
Art. 81(2) sets the 5% rate. Separately, a legal-entity tenant withholds tax at source: 5% from a landlord in the register of people letting residential space and 20% otherwise, according to Espero.ge's account of Revenue Service situation manual No 1518 (7 June 2023). Property tax applies to an individual only when family income in the previous year exceeded GEL 100,000 (Law No 1874); see property tax.
The holding period moves the tax line: sell at 23 months and 5% of the gain is due, declared by the 15th of the next month on form II-04-2; sell at 25 months and it is not (see tax on a sale). Because ROI ignores time, annualise a multi-year figure with CFI's "[(Ending Value / Beginning Value) ^ (1 / # of Years)] - 1". The 96.3% 10-year case in our rental yield calculator becomes about 7.0% a year by our calculation, not 9.6%, because later gains build on earlier ones.
Price growth and the benchmark: which numbers to plug in
| Measure | Change | Source |
|---|---|---|
| Tbilisi primary-market average, USD, July 2025 to July 2026 | +6.4% | Our calculation from Galt & Taggart (USD 1,340 to 1,426 per m²) |
| Tbilisi new dwellings, GEL offer prices, Q2 2026 | +4.9% | Geostat |
| Tbilisi average asking price, USD, August 2026 | +3% | TBC Capital |
| Batumi turnkey primary, USD, June 2026 | +9.8% | Galt & Taggart |
| Batumi newer buildings, registered sales, USD, September 2026 | +5.2% | Colliers |
| Tbilisi, March 2020 | -5.4% | Galt & Taggart |
The five recent year-on-year rates range from +3% to +9.8%, but Colliers put Batumi's primary market alone at -10.7% in September, a figure it ties to a high-end registration a year earlier. The March 2020 fall is the sourced downside to test, not a forecast.
An ROI also needs a yardstick. Lari term deposits averaged 8.91% in July 2026 and foreign-currency ones 2.52% (NBG, via 1TV). A Galt & Taggart chart ending July 2026 sets an 8.5% rental yield beside a 9.6% lari deposit and a 2.4% dollar deposit. For a real ROI, subtract inflation, 5.6% in September 2026; our page on inflation and property goes further.
Lari, dollar and a loan: one flat, several ROIs
The NBG official rate was GEL 2.7139 per dollar on 31 October 2025 and GEL 2.5992 on 31 October 2026: the dollar lost 4.2% against the lari. Tax works in lari too: under Tax Code Art. 73(10) a foreign-currency deal converts at the NBG rate of its own day, so a flat bought and sold for the same dollars can show a lari gain or loss. A gain that comes only from the exchange rate is a question for an accountant; see lari and dollar risk.
Borrowing changes the base. New mortgages in July 2026 averaged 7.7% on foreign-currency loans and 11.4% on lari loans (NBG data), and NBG rules cap foreign-currency loans at 70% of value. When the net yield after tax is below the effective loan rate, a loan cuts the cash return on your own money and multiplies any price move. Confirm bank terms for foreigners; our mortgage calculator gives the payment.
Where ROI is printed, and where it never appears
- Developer advertorial: a piece marked "(Ad)" on Interpressnews, 10 April 2025, said "most projects promise an ROI of 12-16%" and that Pontus Rotana's "projected ROI was 14.3%" at launch while its "current ROI stands at 12.2%", modelled by Cushman & Wakefield. None states a base, period or tax treatment.
- Portal listing: an Expat.com advert for hotel units in Batumi and Gonio offers 10% or 11% a year for 10 years, starting after signing, and says the obligations are "registered with the Ministry of Justice of Georgia". We could not confirm what registration is meant, and no income currency is stated.
- Contract: a sale or preliminary agreement states a price and a payment schedule, not an ROI. A promised return binds only when written in as an obligation of a named party.
- Bank offer: nominal and effective rates; an advert quoting any price term must also give the effective rate (NBG Order 32/04, Art. 3(15)(a)).
- Market reports and forms: Galt & Taggart and TBC Capital publish gross yield and price changes; we found no ROI series. Rent goes in Annex B of form II-04, a sale gain on form II-04-2, and ss.ge cards have no yield field.
In an aparthotel pool the owner's income is a share, 60% to 70% in sales listings; see rental pools. InternationalInvestment.biz, citing Galt & Taggart, wrote in March 2026 that Batumi's "net, real yield is even lower - 2-4%". An advertised ROI is a claim; ask how it was computed.
Worked example: one year of ROI on a 55 m² Tbilisi flat
Our calculation, from published averages: at the Galt & Taggart July 2026 Tbilisi figures of USD 1,426 per m² and monthly rent of USD 10.1 per m², a new 55 m² flat costs USD 78,430 and rents for USD 555.50 a month. We use our calculator's planning assumptions: 1 empty month, 10% management, a 5% repairs reserve.
- Net rent. 11 months bring USD 6,110.50. Less management (USD 611.05), repairs (USD 333.30) and 5% tax on the rent collected (USD 305.53), the flat keeps USD 4,860.63, or 6.2% of the price.
- Paper ROI. A +6.4% price move adds USD 5,019.52; a -5.4% move removes USD 4,235.22.
- Loan. 30% own money (USD 23,529) and USD 54,901 borrowed at 7.7%, interest only for simplicity: year-one interest USD 4,227.38 leaves USD 633.25 of rent.
- Sale at 12 months, +6.4%. From USD 83,449.52, subtract the 3% agent (USD 2,503.49), 5% gain tax (USD 250.98) and the GEL 150 registration (USD 57.71 at the 31 October 2026 rate): USD 7,067.97 gained on USD 78,487.71 put in.
| Scenario | Price flat | Price +6.4% | Price -5.4% |
|---|---|---|---|
| Cash, ROI on the price | 6.2% | 12.6% | 0.8% |
| 30% own money, ROI on cash in | 2.7% | 24.0% | -15.3% |
| Cash, sold after 12 months | not modelled | 9.0% | not modelled |
With a 6.2% net yield below a 7.7% loan rate, the loan shrinks income and magnifies price moves. The sale row ignores Ruling 143 cost additions and the lari conversion, which need an accountant. Measured in lari, the unchanged dollar price fell from GEL 212,851 to GEL 203,855 between the two October dates.
ROI beside yield, total return, payback and IRR
| Measure | What it counts | Difference from ROI |
|---|---|---|
| Gross yield | One year of rent over the price | No costs, tax or price change |
| Net yield | Rent after costs and tax, over the price | Leaves out value change and exit costs |
| Total return | Our calculator's multi-year sum of net income and compounded value change | A cumulative ROI; annualise it |
| Payback period | Years until rent repays the price | Ignores the price change |
| IRR | A rate weighted by when each cash flow arrives | Handles time; no Georgian source defines it for property |
The Interpressnews advertorial mentions "ROI or IRR" in one breath, yet only IRR cares whether rent arrives in year 1 or year 10. With a loan, the same flat also has a cash-on-cash ROI on your own money: 24.0% against 12.6% in our example.
The term in five languages
| Language | Return on investment | Total return |
|---|---|---|
| Georgian | ინვესტიციის უკუგება (ROI) | ჯამური უკუგება |
| English | return on investment (ROI) | total return |
| Russian | рентабельность инвестиций (ROI) | совокупная доходность |
| Hebrew | תשואה על ההשקעה (ROI) | תשואה כוללת |
| Arabic | العائد على الاستثمار (ROI) | العائد الكلي |
Georgian contracts use no word for ROI; the Tax Code speaks of შემოსავალი, income, and ნამეტი შემოსავალი, the gain on a sale.
Warning signs when reading an ROI
- No period. 12% over a 10-year contract is not 12% a year.
- A total divided by years. That overstates the yearly rate; annualise instead.
- Gross yield under another name. No empty months, management or 5% tax.
- The operator's share left out. Pool owners receive only part of the income.
- No currency. The dollar lost 4.2% against the lari in the 12 months to 31 October 2026, so a dollar ROI overstated the lari one.
- The word "guaranteed". It is the advertiser's word; only a written obligation of a named party binds anyone.
To be added by the team: add a brochure page quoting an ROI with the gaps marked, a redacted rental-pool agreement showing the split, and a bank offer with both rates.
How to work out the ROI on a Georgian flat
Fix the period
One year, or the planned holding period.
Add up the base
Price, registration, finishing and furniture.
Net the rent
Empty months, management, repairs and 5% tax.
Choose a price scenario
A sourced growth rate and the -5.4% stress case.
Subtract exit costs
Agent, and the gain tax if under 2 years.
Annualise and compare
Against deposit rates and inflation, in your currency.
Frequently asked questions
Does Georgian law define ROI?
No. The Tax Code only sets the tax on rental income (Art. 81(2)) and defines the sale gain (Art. 82(4)(b)).
What is the basic formula?
Gain divided by the money invested, for a stated period; annualise multi-year figures.
Is ROI the same as rental yield?
No. Yield is one year of rent over the price; ROI adds value change and all costs.
Which tax comes off the rent?
5% on income from letting a home for living, with no deductions (Art. 81(2)).
Does a sale within 2 years lower ROI?
Yes: 5% of the gain (Art. 81(3)); exempt after more than 2 years.
Does a mortgage raise ROI?
Only on your own money, and only when the net yield beats the loan rate.
Dollars or lari?
Your own currency. In the 12 months to 31 October 2026 the dollar lost 4.2% against the lari.
Are advertised ROIs of 12% to 16% realistic?
We could not confirm any; ask for the base, period, currency and tax.
Sources
- Tax Code of Georgia, Arts. 73, 81 and 82, Matsne (accessed 1 November 2026); Public Ruling No 143, 14 May 2026
- ROI formula, Corporate Finance Institute (accessed 1 November 2026)
- Tbilisi residential market, July 2026, Galt & Taggart
- Official rate, 31 October 2026 and 31 October 2025, National Bank of Georgia
- Tbilisi housing, August 2026, Homesoverseas.ru, citing TBC Capital
- Real estate investments in Batumi, Interpressnews advertorial, 10 April 2025
- Hotel units in Batumi and Gonio, Expat.com (accessed 1 November 2026)
- Georgian residential market 2026, InternationalInvestment.biz, 24 March 2026
- Flats for sale, ss.ge (accessed 1 November 2026)
- Batumi residential market, Q2 2026, Galt & Taggart
- Landlord registration and taxes, Espero.ge, on Revenue Service situation manual No 1518 of 7 June 2023
- NBG Order No 32/04, Art. 3(15), Matsne; deposit rates, July 2026, 1TV, citing NBG; mortgage rates, July 2026, InternationalInvestment.biz, citing NBG; inflation, September 2026, NBG
- Residential Property Price Index, Q2 2026, Geostat; Batumi sales, September 2026, InternationalInvestment.biz, citing Colliers
Change log
- - Glossary entry published from the Tax Code of Georgia, Public Ruling No 143, the Corporate Finance Institute, Galt & Taggart, Geostat, TBC Capital, Colliers, the National Bank of Georgia, the Revenue Service (via Espero.ge), 1TV, Interpressnews, Expat.com, InternationalInvestment.biz and ss.ge.