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Attention to property owners renting out homes — the fine has been increased fivefold
Attention to property owners renting out homes — the fine has been increased fivefold
Within the framework of amendments made to the Tax Code, as of 1 January 2026, a 10 percent tax is applied to income earned by individuals from renting out residential property owned by them to other individuals. Previously, a 14 percent tax was levied on income obtained from residential rentals between individuals.
This change means that a person who rents out their home for 400 manats will now pay 40 manats in monthly tax instead of 56 manats. The new regulation does not apply to property rented out within the scope of entrepreneurial activity or leased to legal entities. For this category, the 14 percent tax rate remains unchanged.
The purpose of this change is not to reduce the tax burden for those earning income from residential rentals. Rather, it aims to prevent tax evasion and to encourage the formal registration of lease agreements for residential properties owned by individuals, as well as the proper documentation of transactions under such agreements.
Another innovation aimed at preventing tax evasion concerns financial sanctions (fines). Accordingly, as of 2026, a fine of 200 manats has been established for failure to submit an application for registration with the tax authority. Although a penalty previously existed for this violation, its amount was 40 manats. This means that a person renting out their home without submitting an application for tax registration will now be fined 200 manats instead of 40.
In addition, a taxpayer who fails to submit a report to the tax authority within the prescribed period regarding rental income received is subject to a fine of 40 manats. Furthermore, if the amount of tax indicated in the report is understated compared to the actual amount, or if the tax payable to the budget is concealed by failing to submit a report, a fine amounting to 50 percent of the understated or concealed tax amount is imposed.
However, it should also be emphasized that a person renting out their home may pay tax on the income earned even without being registered with the tax authority.
Thus, as of 1 January 2025, citizens earning rental income have been granted the right to appoint a tax agent without personally registering with the tax authority and to delegate the fulfillment of their tax obligations to that person. Under the legislation, the tax agent calculates the tax, withholds it from the taxpayer, and transfers it to the appropriate authority. Maintaining separate records of income paid to taxpayers and taxes withheld and transferred, including records for each taxpayer individually, is an obligation of the tax agent.
In practice, there are cases where not only homeowners but also tenants are held liable when a property is rented out without a formal lease agreement. In such cases, tenants may be held responsible for failing to register at their place of residence or place of stay. According to the Code of Administrative Offences, failure by a citizen to register at their place of residence or place of stay, or failure to comply with registration and deregistration rules, results in a warning or a fine of 30 manats.
Within the framework of amendments made to the Tax Code, as of 1 January 2026, a 10 percent tax is applied to income earned by individuals from renting out residential property owned by them to other individuals. Previously, a 14 percent tax was levied on income obtained from residential rentals between individuals.
This change means that a person who rents out their home for 400 manats will now pay 40 manats in monthly tax instead of 56 manats. The new regulation does not apply to property rented out within the scope of entrepreneurial activity or leased to legal entities. For this category, the 14 percent tax rate remains unchanged.
The purpose of this change is not to reduce the tax burden for those earning income from residential rentals. Rather, it aims to prevent tax evasion and to encourage the formal registration of lease agreements for residential properties owned by individuals, as well as the proper documentation of transactions under such agreements.
Another innovation aimed at preventing tax evasion concerns financial sanctions (fines). Accordingly, as of 2026, a fine of 200 manats has been established for failure to submit an application for registration with the tax authority. Although a penalty previously existed for this violation, its amount was 40 manats. This means that a person renting out their home without submitting an application for tax registration will now be fined 200 manats instead of 40.
In addition, a taxpayer who fails to submit a report to the tax authority within the prescribed period regarding rental income received is subject to a fine of 40 manats. Furthermore, if the amount of tax indicated in the report is understated compared to the actual amount, or if the tax payable to the budget is concealed by failing to submit a report, a fine amounting to 50 percent of the understated or concealed tax amount is imposed.
However, it should also be emphasized that a person renting out their home may pay tax on the income earned even without being registered with the tax authority.
Thus, as of 1 January 2025, citizens earning rental income have been granted the right to appoint a tax agent without personally registering with the tax authority and to delegate the fulfillment of their tax obligations to that person. Under the legislation, the tax agent calculates the tax, withholds it from the taxpayer, and transfers it to the appropriate authority. Maintaining separate records of income paid to taxpayers and taxes withheld and transferred, including records for each taxpayer individually, is an obligation of the tax agent.
In practice, there are cases where not only homeowners but also tenants are held liable when a property is rented out without a formal lease agreement. In such cases, tenants may be held responsible for failing to register at their place of residence or place of stay. According to the Code of Administrative Offences, failure by a citizen to register at their place of residence or place of stay, or failure to comply with registration and deregistration rules, results in a warning or a fine of 30 manats.