AZE.US
Azerbaijan’s housing rental market is going through a seasonal slowdown, with experts pointing to weaker spring demand, increased supply and a shift in interest toward summer homes ahead of the holiday season.
Demand for apartments usually picks up in late August and September, when students and families prepare for the new academic year. In spring, activity is typically softer. This year, experts say the slowdown is more visible, partly because tourism-related demand has also weakened.
One segment affected by that trend is apartments rented by entrepreneurs for short-term daily rentals. As tourist flows weaken, demand for such properties also declines.
Another issue increasingly seen in the rental market is the deposit requested by landlords. Experts say deposits are not illegal if the terms are clearly regulated in the lease agreement between the landlord and the tenant.
Landlords usually ask for a deposit as protection against property damage, unpaid utility bills or other costs that may appear after the tenant moves out. If there is no debt or damage, the remaining amount should be returned to the tenant.
The key tax issue is how rental income is calculated. Under Azerbaijan’s Tax Code, income earned by individuals from renting out real estate is taxed at a rate of 10%.
The tax is not calculated on the landlord’s “net profit.” It is calculated on the rental amount stated in the lease agreement.
For example, if an apartment is rented out for 600 manats per month, the tax would be 60 manats. If the lease agreement sets one total amount that includes both rent and utility payments, the tax is calculated from that full amount.
Utility payments do not automatically reduce the taxable base. It depends on how the lease is structured. If utilities are listed and paid separately, they may be treated separately from rent.
But if the contract records a single combined payment for rent and utilities, tax is charged on the total amount.
The State Tax Service says this approach is meant to keep tax administration clear and prevent artificial splitting of payments that could be used to reduce the taxable amount.
AZE.US