Property Tax

In Which Cases and How Much Should We Pay?

In Azerbaijan, individuals who own apartments, receive rental income, and sell apartments are taxpayers in certain cases.

1. Property Tax of Individuals

Who must pay?
Every individual who owns an apartment or house for residential purposes in Azerbaijan is obliged to pay annual property tax.

How is the tax calculated?
The first 30 sq.m. of the area of apartments and houses is exempt from tax.
For parts over 30 m², the tax is calculated depending on the area:

Territorial Tariff (AZN / sq.m)

Baku city 0.40

Ganja, Sumgayit, Absheron 0.30

Other city and regional centers 0.20

Towns and villages 0.10

Example:
For an apartment of 100 sq.m (Baku city):
100 - 30 = 70 sq.m is subject to tax
70 × 0.40 = 28 AZN annual tax

If there are several owners of the apartment, this amount is divided according to their share.

Payment period:
1st installment – until August 15
2nd installment – until November 15

2. Rental Income Tax

In what case does the lessor pay tax?
If you rent out your apartment or house, this income is subject to taxation. The rule depends on who pays the rent:

A) If the tenant is a legal entity or an individual entrepreneur:

14% tax is withheld directly at the source of payment

The landlord does not submit an additional declaration

B) If the tenant is an individual:

The landlord must register with the tax authority

He must declare his annual income and pay 14% tax

For example:

Monthly rent: 500 AZN
Annual income: 6,000 AZN
Tax: 14% × 6,000 = 840 AZN

Note: Renting a residential property is not subject to the simplified tax regime. This applies only to offices, facilities, etc. non-residential premises.

3. Tax on the Sale of Real Estate

In which cases is the tax not levied?

If the landlord (the person in the name of the tenant) has been permanently registered in the apartment he is selling for at least 3 years, the tax on the sale is not levied.

In which cases is the tax levied?
If the seller has been registered at the same address for less than 3 years
Or if he has not been registered at all, then simplified tax is applied.

How is the tax calculated?

Formula:
(sold area – 30 m² × 15 AZN × zone coefficient × 1.5

Example:
100 m² apartment, no registration, Baku center
(100 - 30) × 15 × 4 = 4,200 AZN tax

If he had been registered, the tax would have been approximately 2,940 AZN after an additional 30% area discount.

Additional note:

This tax is calculated by the notary and is collected directly at the time of sale. The tax is collected again if the same apartment is resold within 3 years.

4. Other Related Taxes and Payments

Value Added Tax (VAT)

VAT is not applied to the purchase and sale of houses between individuals

However, if construction companies sell apartments and are VAT payers, the tax may be included

Land Tax

An additional land tax is also paid for the land area owned by an individual house. This is also a municipal tax and is very low

Additional costs related to the mortgage:

State registration fee: 30–50 AZN

Insurance fee: paid once a year (approximately one thousandth of the house)

“Fund money”

Assigned by the MTK in new buildings
Not an official tax, but for block repairs, elevators, etc. is a one-time payment for

Conclusion
The tax obligations of the real estate owner are as follows:

Property tax – annual, a small amount
Rental income – 14% income tax
Sales tax – depending on the registration period and area

By complying with tax obligations:
You act in accordance with the legislation
You avoid fines and interest in the future
You prevent problems with your property rights