Property Taxes in Baku for Foreign Owners: 14% Rent Tax, 10-30 Manat a Year

A foreigner who buys an apartment in Baku pays the state almost nothing for simply owning it, but a meaningful share of whatever that property earns. The annual tax on a typical 80 sqm flat lands at 10 to 30 manat¹, while a non-resident landlord hands over 14% of rental income¹.

That gap is the defining feature of Azerbaijan's tax system: holding property is nearly free, earning from it is taxed at a standard income rate. The 4% property transfer tax disappeared on 1 January 2024, and there is no personal income tax on capital gains from reselling a home.

Below is the full payment map: what you owe at purchase, what you owe every year, what you owe on rental income, and where foreign owners typically overpay.

Quick Answer

• Annual property tax for an 80 sqm apartment in Baku runs roughly 14-30 manat per year. The base is 0.40 manat per taxable square meter, multiplied by a location coefficient of 0.70-1.50³⁵.

• The first 30 sqm of any residential unit are exempt entirely. Worked example for 100 sqm at coefficient 1: (100 - 30) x 0.40 = 28 manat³.

• Rental income tax: 14% on annual income up to 200,000 AZN, rising to 25% above that threshold (Tax Code of Azerbaijan, Article 101.1)⁶. Separately, one local outlet reports landlords may instead face a flat 10% withheld directly from the contracted rent amount rather than from profit⁴, so always confirm the applicable mechanism with a local accountant before filing.

• Non-resident legal entities pay 10% withholding at source on rental and sale income from Azerbaijani property (Article 125.1.10)⁶.

• At purchase: a notary fee of 0.2% of the transaction value plus a registration duty of 0.02%, with a floor of 100 AZN and a cap of 10,000 AZN⁶.

• 18% VAT is built into new-build developer pricing; part of it is refunded to individuals who pay by bank transfer. Between January and June 2026, 17.0504 million manat was refunded under this program⁴.

Scenarios and Options

Scenario 1: Buy to live, no rental. The cheapest regime available. The only recurring payment is the municipal property tax, 14-30 manat a year on a standard two-bedroom in Baku¹. Add building maintenance and security fees collected by the management company²; in business-class buildings these can easily run tens of times higher than the tax itself. The trade-off: your capital sits idle.

Scenario 2: Long-term rental with declared income. Reported rates run 14% of gross income¹. At a monthly rent of 900 AZN, that is 1,512 AZN in tax per year. Important detail: the 30 sqm exemption does not apply if the unit is rented out or used commercially³, so the landlord pays property tax on the full footprint. The absolute figures stay small, but the regime technically changes. Note also that under some readings, the obligation to withhold and remit can shift to the tenant when both parties are individuals¹, so get the lease wording checked before assuming you must file personally.

Scenario 3: New-build purchase with VAT refund. Paying the developer strictly by bank transfer unlocks a partial VAT refund under the State Tax Service program⁴. The condition: the developer must be enrolled in the refund scheme. Cash payment forfeits the right automatically.

Scenario 4: Holding through a legal entity. The corporate property tax rate on non-residential buildings is 1% of inventory value versus 0.1% for individuals; profit from a sale is taxed at 20%⁶. For a residential apartment, this structure is almost always the worse deal.

Comparison Table

Main Risks and Mistakes

Mistake 1: calculating tax from market price. The individual property tax base is inventory value or taxable area, not what you actually paid the seller. There is no public database of inventory valuations by address. Request a calculation from the municipality before closing.

Mistake 2: ignoring the location coefficient. The spread of 0.70-1.50⁵ means a twofold difference between the outskirts and central Baku. For one apartment this is pocket change; across a five-unit portfolio the gap becomes visible.

Mistake 3: paying a developer in cash. This forfeits eligibility for the VAT refund under the state program⁴. Mitigation: pay only by bank transfer and verify in advance that the developer participates in the refund scheme.

Mistake 4: renting informally without a contract. 14% can feel excessive until the first audit. Declare the income and keep a signed lease; this also protects you in disputes with tenants.

Mistake 5: confusing the municipal and state tax levels. Individual property tax is municipal; rental income tax is a state levy. Deadlines, payment details and administering bodies differ.

Mistake 6: relying on outdated articles about a 4% transfer tax. That tax was abolished on 1 January 2024. If an advisor still lines it into your closing budget, find a new advisor.

As of 2026 the published rates above are current, but Tax Code language on the residential property tax base allows for different interpretations, so confirm the exact figure for your specific unit with a local lawyer before signing.

FAQ

How much does a foreigner pay to simply own an apartment in Baku per year?

For an 80 sqm apartment, roughly 14-30 manat a year after the location coefficient is applied¹. That is comparable to a single electricity bill.

Does the tax differ for foreigners versus Azerbaijani citizens?

The property tax rate itself is the same. The difference shows up in exemptions: personal discounts of up to 30 manat and the 30 sqm exemption are tied to resident categories³⁵.

What rental tax does a non-resident pay?

14% on gross income up to 200,000 AZN per year, 25% on the amount above that threshold¹⁶. Non-resident legal entities face 10% withholding at source. Some reports also describe a flat 10% withheld directly from the contract rent figure rather than net profit⁴, so check which rule applies to your lease.

Do I pay tax when selling an apartment?

For individuals, capital gains tax on residential property sales was abolished as of 1 January 2024. For legal entities, the rate is 20%⁶.

How much does closing a deal cost?

The notary charges 0.2% of the transaction value; the registration duty is 0.02%, with a floor of 100 AZN and a cap of 10,000 AZN⁶. Notary fees typically land between 300 and 1,500 AZN.

Can I get a VAT refund when buying a new build?

Yes, under the State Tax Service program, provided you pay by bank transfer to a developer enrolled in the scheme. In the first half of 2026, buyers received 17.0504 million manat in refunds⁴.

Do taxes in Ganja and Sumgait differ from Baku?

The rate structure is identical, but the location coefficient is lower and the price base is smaller: 450-550 USD/sqm in Ganja and 550-650 USD/sqm in Sumgait versus 1,100-1,300 USD/sqm in Baku⁷.

Can a foreigner buy the land under a house?

No. Foreign individuals and foreign legal entities are not permitted to own non-agricultural land in Azerbaijan; leasehold or a right-of-use arrangement remains the available route.

Source: AZE.US

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This material was prepared with the help of artificial intelligence and checked by a person. Editorial responsibility: Housebook Investment LLC.