Selling property in Georgia: the two-year clock, and the 5% or 20% split

Gains from selling a residential apartment or house, including the land attached to it, fall under the reduced 5 percent rate. Everything else is taxed at the standard 20 percent: bare land, commercial premises, warehouse units, and — a point worth noting for anyone who bought into an aparthotel — hotel rooms operated within a hotel business. Transfers of rights under a preliminary purchase agreement, the common way of flipping a contract before completion, also sit at 20 percent.

Hold a residential property for more than two years and the gain is exempt from income tax entirely. The decision also sets out how the holding period is counted in the awkward cases. For a house you built yourself, the clock starts when ownership of the completed structure is registered — not when you bought the land. In a swap arrangement, it starts when you secure title to the new completed apartment. Where a property was inherited, the holding period of a first-degree relative can be added to your own.

One point settles a question owners ask often: renting the property out temporarily, or using it as a registered business address, does not remove the residential exemption once the two years are up. That matters in a city where a flat is frequently bought, let for a few seasons and then sold. It does not, however, protect someone trading at volume — which is the subject of the next section.

The Revenue Service looks at how often someone transacts. Systematic property trading or commercial development is taxed as business activity at 20 percent, and high-frequency transactions can be reclassified that way, which removes access to the residential exemption. There is no published number of sales that triggers this, so the practical advice is the dull kind: keep the acquisition documents, the registration dates and the evidence of personal or rental use for each property, and get an opinion before the third or fourth sale rather than after it.