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What Economic Benefits will Reduced Tax on Rental Apartments Bring?

Tax on rental apartments is reduced from 20% to 5% – the government’s initiative is positively evaluated both by representatives of the real estate sector and  experts.
In their view, this will create a full official statistics of  what is happening in real estate, and in addition, this decision will encourage investment in real estate.

According to the expert Emzar Jgerenaia, this step is very important in terms of supporting the construction business.

“Reduction of tax from 20% to 5%  is a very positive initiative that will allow people to buy an apartment not only to live in, but also to invest available  funds. Now people will have a choice – to invest in banks, or buy real estate for rent, because now they will pay to the budget not  20% of the rental but only 5%. If the government  takes steps to simplify lending, then it will be easier to buy an apartment, and, accordingly, people’s revenues will grow. Our society is still in the mistaken belief that some innovative economy based on high technology can be built in Georgia. In fact, this is unrealistic. Even if someone invents something, he will be immediately taken away to the West. Georgia will not be able to produce products similar to “Samsung” or “Apple”. No one will cede this business, as the future belongs to it. So the current situation is quite different, and it is necessary to use the opportunities that exist ,”- the expert notes.

According to Irakli Rostomashvili, the head of the Developers’ Association, an initiative of the government is an additional motivation for the development of the real estate market.

“Now everyone who rents an apartment are doing it in order to increase their income, but it has not yet become a full-fledged business. The government’s new initiative is a major step in this direction. Those who make high profits from their activities will be able to invest their savings in real estate, “- he notes.

Apart from that, he believes that  the initiative will improve the quality of statistical data.

“To date, there are no statistics on the lease of real estate. According to unofficial data, approximately 40 000 individuals lease property, but it is impossible to say anything more or less accurately – the tax was so high that individuals were forced to lease apartments informally. Now when the tax is set at 5%, they will have the motivation to work openly. And the state will have exact data on this sector of the economy, “- Irakli Rostomashvili underlines.

In his words, the government’s initiative will help revitalize the real estate market, since individuals will have motivation to buy an apartment for investment purposes.