Renting Out Your Property After Handover
The keys arrive and two questions arrive with them. Who is going to run this apartment, and what does the tax office expect from you now that it earns.
Neither question has a single answer, but both have checkable ones. The tax rules sit in the Tax Code of Georgia, in Order N996 of the Minister of Finance, and in the Revenue Service's own published guidance. The commercial questions sit in a contract you have not signed yet, which means you can still change it. This article covers both, in the order you will meet them.
Where a point is legal, we say what the law says and where to read it. What applies to your situation is a question for your own lawyer or accountant.
Before you can let it: what has to be in place
You can let the property once title is registered in your name and the accounts attached to the apartment have been moved across to you.
Five items make up that list:
The registration of your title. The extract from the Register of Rights to Immovable Property is what proves you own the apartment. Handover of keys and registration of title are separate events, and they do not always happen on the same day.
The defects list. Sign the acceptance document with the defects written into it, not after you have accepted the apartment as it stands. Once you have signed clean, a claim about the shower tray is a conversation rather than an obligation.
The utility accounts. Electricity, water and gas move into your name, with meter readings recorded on the day of handover. Unpaid balances from the construction period follow the meter, not the previous holder of it.
The building service charge. Establish which month your liability starts and what the charge covers. In a serviced building this is a recurring cost that runs whether or not the apartment is occupied.
An inventory. Photograph and list the furniture and appliances. You will need it for a management contract, and you will need it the first time a guest damages something.
Managing it yourself, or handing it to a company
If you live outside Georgia and want to let short-term, a management company is the practical answer. If you want one long-term tenant, managing it yourself is realistic.
The difference is labour, and where that labour has to be physically located. A short-term let is a daily operation: pricing against the season, keeping listings live, meeting guests, cleaning and laundry between stays, replacing what breaks, answering the message that arrives at eleven at night about the air conditioning. Someone has to be in the city. What a management company sells you is presence, and the marketing is secondary to that.
A long-term tenancy is a different shape. One contract, one payment cycle, an inspection every few months. Owners who live abroad manage this with a local contact and a bank account, and many do.
One thing a management company does not do is take your tax obligations off you. The declaration is filed in your name, the liability is yours, and the fact that a company collected the money on your behalf does not move that. Ask what the company provides at year end — a statement of gross receipts by month is what your accountant will ask you for.
Why the management company matters before you buy
In an aparthotel or a branded residence, the operator is part of what you are buying, so it belongs in your due diligence rather than in your first year of ownership.
Four questions to put before you sign a purchase contract:
Who will actually operate the building. A hotel brand attached to a project and a rental programme available to apartment owners are two different arrangements. One can exist without the other. Ask which of them you are being offered, and ask to see it in writing.
How long the company has run buildings. Where the developer has set up an in-house management company, ask which buildings it currently operates and since when. An operator with three seasons behind it in Batumi has answered questions a new one has not met yet.
Whether you are obliged to use it. Some purchase contracts tie the apartment to the building's programme. Others leave you free to appoint anyone or to let the apartment yourself. This is a term, and terms are negotiable before signature.
Whether short-term letting is permitted at all. The rules of the building can restrict it, and a restriction discovered after handover is expensive. Ask your lawyer to read the building's rules alongside the purchase contract.
How the revenue split actually works
The split sets the share of gross rent each side takes. Terms published by operators in Batumi put the management share between 25% and 40% of gross receipts, with 30% the figure that appears most often — an owner's share of 60% to 75%.
That number is half the arithmetic. The other half is which costs are subtracted before the split and which come out of your share afterwards, and this varies from project to project and from company to company. There is no market standard here to assume your way into. Two contracts that both say 60/40 can pay out very differently.
The costs that move between the two sides:
- Booking platform commission
- Cleaning and laundry between stays
- Consumables — toiletries, coffee, cleaning supplies
- Utilities during occupancy and during vacancy
- Minor repairs, and the threshold above which a repair stops being minor
- Replacement of furniture and appliances as they wear out
- Marketing and photography
- The building service charge
- Bank and currency conversion charges on your payout
Ask for this as a written list that is closed — meaning the contract states these costs and no others may be deducted. An open-ended clause allowing the company to deduct "operating expenses" is the term that produces disputes in year two.
Two further points belong in the same conversation. Your 5% tax is not a cost of the letting operation; it comes out of your share, and it is calculated on the gross rent rather than on what reaches you. And if a guaranteed payment is offered, read it as a commercial promise made by a specific company: ask which legal entity is making it, for how many years, and what the contract provides if a payment is missed.
What to check before you sign a management agreement
The agreement decides what you receive and how much you can see. These are the clauses worth an hour of a lawyer's time:
Term and exit. How long you are committed, what notice you must give, and what leaving early costs you.
The closed list of deductions. As above. This is the single clause with the largest effect on your payout.
Where the money sits. Which account guest payments arrive in, whose name is on it, when your share is transferred, and in which currency. Rent paid to an account outside Georgia is still Georgian-source income and still declared.
Reporting. What you can see and how often. Occupancy, nightly rates and booking-level detail are reasonable to ask for; a quarterly figure with no breakdown behind it is not.
Who contracts with the guest. Whether the company acts as your agent or leases the apartment from you changes who is liable for damage — and, as the next section explains, it can change your tax rate.
Your own use. How many nights a year you may stay in your apartment, how far ahead you must book, and whether peak weeks are excluded.
Pricing authority. Whether the company may let below a floor price you have agreed.
Refurbishment. Who decides that the apartment needs refreshing, and who pays for it.
Sale. Whether you can sell with the contract attached, and whether the buyer inherits it.
What you pay on rental income
Rental income is taxed at 5% where you let residential property for residential purposes and take no deductions from that income. Article 81, parts 2 and 5 of the Tax Code of Georgia sets this out, and it applies whether the tenant is an individual, a company or an organisation.
"No deductions" is the condition that carries the weight. Choosing 5% means you do not subtract the management fee, the utilities, the service charge or the repairs. The tax is calculated on the gross rent — on the whole amount, before the split — not on the share that reaches your account. Owners who let through a company at a 30% management fee sometimes discover this at declaration time.
The alternative treatment is 20% on the difference between income and deductible expenses. That is where commercial premises sit, and where residential space let for a purpose other than living sits.
Non-residents pay at the same rates as Georgian citizens. Where the apartment is held by a company rather than by you personally, a different regime applies, and that is a conversation to have with an accountant before you buy rather than after.
The landlord register, and what happens if you are not in it
An individual letting residential space for residential purposes without deductions is required to apply to the Revenue Service and be entered in the register of persons letting residential space. The requirement sits in Article 111² of Order N996 of the Minister of Finance. The application is made through your taxpayer account at rs.ge.
Situational Guide N1518, published by the Revenue Service on 7 June 2023, sets out what follows if you are not on it, and the answer differs by tenant:
Letting to a private individual. Your absence from the register is not grounds to tax the income at 20%. You keep the 5% rate. You are fined 100 GEL under Article 291 for not having filed the application.
Letting to a legal entity. The right to apply the 5% rate is restricted, and the company must withhold tax at source at 20%.
That second line is the one that matters if a management company leases your apartment from you rather than acting as your agent, because then your tenant is a company. The registration decides whether that income is taxed at 5% or at 20%, and the difference is not recoverable by explaining afterwards. Establish which model the contract uses, and register either way — the application is short and the fine for skipping it is 100 GEL.
When you declare, when you pay, and what letting does to your property tax
Two deadlines, in different months.
Income tax. The annual declaration covering the previous calendar year is filed by 1 April, through your account at rs.ge. Income is recorded in GEL at the National Bank of Georgia rate on the date you received it, which matters when the rent is paid in dollars.
Property tax. The declaration is filed by 1 November of the year following the tax year, with payment due by 15 November.
Property tax is where letting produces a consequence owners do not expect. The rate is set by annual household income, counted worldwide:
- Below 40,000 GEL — exempt from property tax, though land tax still applies
- 40,000 to 100,000 GEL — 0.05% to 0.2% of the property's value
- Above 100,000 GEL — 0.8% to 1%
Rental income counts towards that figure. An apartment that fell below the threshold in its first year can cross it once it starts earning, and the bill arrives the following November rather than at the moment the rent does. Worth knowing in the year you start letting, not in the year you are assessed.
If you are weighing a management agreement, send it to us before you sign. We will tell you which costs sit on which side of the split, what the exit terms cost you, and which clauses we would ask to have changed — on your contract, not on a general description of how these contracts are put together.
