Georgia is an attractive place to own a rental flat, and short-term letting through Airbnb or Booking is common in Tbilisi and Batumi. What surprises many owners is that the favourable 5% rate is something you have to claim in advance — not something the tax system applies to you because your property happens to be residential.

5% or 20% — what decides it

The distinction Georgian tax law draws is between letting residential space and letting commercial space:

• Residential property let for living purposes — 5%, charged on your gross rental income, with no deduction of expenses.
• Property let to a business for commercial use — 20%.

Here is the point that trips people up: Airbnb sits on the residential side. Even though letting nightly to a stream of guests feels like a commercial operation, the flat is residential space being used for accommodation — so the 5% rate is available to it. Owners often assume the opposite and quietly overpay.

Why it is not automatic

The 5% rate is an election, not a default. To use it, the rental activity has to be registered with the Revenue Service in advance. Do that, and your rental income is taxed at 5% of gross receipts.

Do nothing, and the default applies instead: the standard 20% treatment on your net income. For a property earning steady nightly rates, the gap between 5% of gross and 20% of net is usually large — and it is entirely avoidable. This single administrative step is the difference, and it has to be in place before the income arises rather than sorted out at filing time.

Buying with letting in mind

If you are buying specifically to let, the tax setup is worth deciding at the same time as the purchase rather than afterwards. It affects how you hold the property and how the income is registered from the first booking. We help with the purchase itself and with managing the property once it is let, so the tax position and the practical setup are handled together.

What to watch

• Registering after you have started letting — the election needs to be in place in advance, so late is not the same as never having missed it.
• Letting to a business — if the tenant is a company using the space commercially, the 20% treatment applies.
• Gross, not net — the 5% is charged on gross receipts, so you cannot deduct cleaning, platform fees or furnishings against it.
• Multiple properties or a scaled operation — at some volume the right structure may differ; worth reviewing before expanding.

Frequently Asked Questions

Is Airbnb income taxed at 5% or 20% in Georgia?

Short-term letting of residential property can be taxed at 5% of gross rental income. But that rate is only available if the rental activity is registered with the Revenue Service in advance — otherwise the standard 20% treatment applies.

Isn’t Airbnb commercial use?

Commercially motivated, yes — but the space is residential and used for accommodation, which is what the 5% rate attaches to. Letting to a business for commercial use is the case that carries 20%.

Can I deduct cleaning, fees and furnishings?

Not under the 5% route — it is charged on gross receipts with no deduction of expenses. That is usually still far better than 20% on net for a well-occupied property, but it is worth modelling for your case.

I have been letting for a while without registering. What now?

Tell us the details and we will look at where you stand and what can be put right going forward. The important thing is to get the registration in place before more income accrues under the default treatment.