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Receiving property through inheritance or as a gift in Georgia does not always mean that no tax is due. In most everyday situations — for example, when an apartment, money, or a stake in a business is transferred between close relatives — there may indeed be no tax liability. However, if the property is transferred to a distant relative or a stranger, an income tax liability may arise.
In this article, we’ll examine how inheritances and gifts are taxed in Georgia, who is considered a close relative, what exemption limits apply, and what to keep in mind when formalizing the transfer of property.
Is there a separate inheritance or gift tax in Georgia?
Georgia does not have a separate “inheritance tax” in the conventional sense. The receipt of property through inheritance or as a gift is treated under income tax rules.
This means that, in some cases, the value of the property received is recognized as income for the individual. If such income is not tax‐exempt, it is subject to income tax at a flat rate of 20 %.
Not only the value of the property but also the degree of kinship between the transferor and the recipient is of key importance.
What Can Be Considered Property
Various types of property may be subject to taxation, including:
- an apartment;
- a house;
- a plot of land;
- a car;
- cash;
- a stake in a company;
- securities;
- commercial real estate;
- other property with a market value.
The market value of the property at the time of receipt is typically used to calculate the tax.
Close relatives: when no tax is due
The most favorable tax treatment applies to first‐ and second‐degree heirs.
If property or money is received by a first‐ or second‐degree heir, no income tax is due, regardless of the value of the property.
In other words, an apartment worth 100,000 GEL and an apartment worth 1,000,000 GEL can be received without income tax if the recipient is a first‐ or second‐degree heir.
Who qualifies as a first‐degree heir
First‐degree heirs typically include:
- spouse;
- children;
- parents;
- adopted children;
- adoptive parents;
- grandchildren;
- great‐grandchildren and other descendants in the direct line of descent.
Example: A father gifts an apartment in Tbilisi to his son. The son is a first‐order heir, so no income tax is due upon receiving the apartment.
Who belongs to the second order of inheritance
The second order of inheritance includes:
- brothers;
- sisters;
- nephews and nieces;
- children of nephews and nieces.
Example: A sister transfers a car or a sum of money to her brother. In such a transfer, no income tax is due, since the brother and sister belong to the second degree of kinship.
Third‐ and fourth‐degree relatives: exemption up to 150,000 GEL
A different rule applies to third‐ and fourth‐degree relatives.
They are exempt from income tax only for property valued at up to 150,000 GEL per tax year. If the value of the property received exceeds this limit, tax is payable on the amount exceeding the limit.
Who belongs to the third order of succession
The third order of succession includes:
- grandmothers;
- grandfathers;
- great‐grandmothers;
- great‐grandfathers.
Example: A grandmother bequeaths property to her grandson. It is important to correctly determine the degree of kinship and the applicable order of succession, as the tax treatment depends on this.
Who belongs to the fourth degree of kinship
The fourth degree of kinship includes:
- uncles;
- aunts;
- brothers and sisters of the parents.
An exemption of up to 150,000 GEL also applies to these relatives.
Example of tax calculation for relatives of the 3rd and 4th degrees of kinship
Suppose an aunt transfers property worth 200,000 GEL to her nephew.
The calculation would be as follows:
- 150,000 GEL is tax‐exempt;
- 50,000 GEL is considered taxable income;
- the tax rate is 20 %;
- tax due: 50,000 × 20 % = 10,000 GEL.
Total: Upon receiving property valued at 200,000 GEL, the tax will amount to 10,000 GEL.
If the property is received from a third party
If the donor or testator is not a close relative, the exemption is significantly smaller.
In this case, only property valued at up to 1,000 GEL per calendar year is exempt from income tax if the gift is received from an individual.
Any amount exceeding 1,000 GEL may be subject to income tax at a rate of 20 %.
Why this is important in the context of a will
A will, in and of itself, does not make the recipient a “close relative” for tax purposes.
If a person is named in a will but does not fall into one of the preferential categories of relatives, receiving the property may result in income tax liability.
For example, if an apartment is bequeathed to a family friend, partner, distant relative, or another person not included in the preferential categories, the tax exemption will be limited.
Gifts from an employer: a separate rule
Gifts from an employer to an employee do not qualify for the 1,000 GEL tax exemption.
Such a gift is considered income received as part of an employment relationship. Therefore, it is subject to income tax on the full value, and the tax is typically withheld and paid by the employer as a tax agent.
This may apply not only to cash payments but also to valuable gifts, paid services, bonuses, and other benefits provided to the employee.
Do you need to file a tax return?
If receiving an inheritance or a gift results in taxable income, you may be required to file a tax return and pay income tax.
You should pay particular attention to this issue if:
- the property was received from a person who is not a close relative;
- the value of the property exceeds 1,000 GEL;
- the property was received from a third‐ or fourth‐degree relative and its value exceeds 150,000 GEL;
- the property was received by will from a person who does not fall into an exempt category;
- the property in question is real estate, a vehicle, or a stake in a company;
- the tax value of the property may be disputed.
How the value of property is determined
For tax purposes, the market value of the property is what matters.
This is particularly important when transferring real estate, vehicles, shares in companies, and other property for which the price may differ from the cadastral, book, or contractual value.
If the tax authority considers the declared value to be understated, it may recalculate the tax base based on the market price.
Receiving property and its subsequent sale are separate taxable events
It is important to distinguish between two situations:
- receiving property as a gift or through inheritance;
- the subsequent sale of that property.
Even if no tax was due upon receiving the property, a separate tax issue may arise upon its subsequent sale.
For example, if an individual sells real estate they have acquired and realizes a taxable profit, they may be required to file a tax return and pay tax on the income from the sale.
Inheritance, gifts, and property tax
If, as a result of inheritance or a gift, a person becomes the owner of real estate, land, or a vehicle in Georgia, they may have obligations not only regarding income tax but also regarding property tax.
For example, an owner of real estate or a vehicle may be required to file a property tax return if their total household income exceeds the threshold established by law. Land parcels are subject to separate reporting rules.
Therefore, after acquiring property, it is important to verify not only the tax obligations related to inheritance or gifts but also any subsequent annual tax obligations.
Practical examples
Example 1. A father gives his son an apartment
The son is a first‐order heir. No income tax is due upon receiving the apartment, regardless of its value.
Example 2. A brother gives his sister money
The brother and sister are second‐order heirs. No income tax is due upon receipt of the funds.
Example 3. An aunt transfers property worth 120,000 GEL to her nephew
For fourth‐degree relatives, there is an exemption up to 150,000 GEL. Since the value of the property is below the limit, no income tax is due.
Example 4. An uncle gifts property worth 250,000 GEL
150,000 GEL is tax‐exempt. On the excess amount of 100,000 GEL, 20 % must be paid, which is 20,000 GEL.
Example 5. A friend gives a car worth 30,000 GEL
Since the giver is not a close relative, only 1,000 GEL is exempt. The remaining 29,000 GEL may be subject to income tax at a rate of 20 %.
Example 6. An employer gives an employee a piece of equipment
A gift from an employer is considered income from employment. The 1,000 GEL exemption does not apply; tax is withheld on the full value of the gift.
Common mistakes
Mistake 1. Assuming that all inheritances are tax‐free
In reality, tax exemptions depend on the degree of kinship and the value of the property.
Mistake 2. Not taking the will into account
If a person receives property under a will but is not a close relative, the tax exemption may be limited.
Mistake 3. Reporting an Undervalued Property
In the event of a disputed or clearly undervalued appraisal, the tax authority may use the market value.
Mistake 4. Forgetting about property tax
After registering ownership, annual obligations to declare the property may arise.
Mistake 5. Confusing a gift from an individual with a gift from an employer
Separate rules apply to gifts from employers, and the 1,000 GEL exemption does not apply.
Conclusion
In Georgia, inheritance and gift taxation depends on three key factors: the degree of kinship, the value of the property, and the status of the transferor.
The most favorable tax regime applies to first‐ and second‐degree relatives — no income tax is payable regardless of the value of the property. For third‐ and fourth‐degree relatives, an exemption limit of up to 150,000 GEL applies. If the property is received from a third party, the exemption is limited to 1,000 GEL per year, and any amount exceeding this limit may be subject to income tax at a rate of 20 %.
Before formalizing a gift, inheritance, or will, it is recommended to check the tax implications in advance. This is especially important when transferring real estate, vehicles, land, business shares, and other valuable property.
ESPERO helps you navigate the tax implications of inheritance and gifts in Georgia, prepare the necessary documents, and determine whether you are required to file a tax return and pay taxes.