How the tax for the first apartment will be calculated/ Here's who will pay more under the new formula

2026-06-19 08:52:04, Ekonomi CNA

How the tax for the first apartment will be calculated/ Here's who will pay

The draft law proposed by the Ministry of Finance for a new real estate tax on first homes, despite the 50% deduction of the value of the house as non-taxable, is expected to increase the obligation for expensive properties.

Even with the new proposed formula, the house tax liability will be calculated on the value of the property, but the tax rate is proposed to be 0.1 to 0.2% of the value from the 0.05% that is in force. The proposed tax rate for the residential building category increases from 2 to 3 times the applicable rate.

For the taxation of the first residence, the new formula determines a 50% deduction of the value of the house as non-taxable. But for the deduction of 50% of the value as non-taxable, for the first residence, consequently to pay half the tax, it determines that it will be benefited if the value of the house (on which the tax will be calculated) does not exceed twice the value of the maximum threshold as non-taxable. On the contrary, if the value of the house exceeds twice the value of the non-taxable threshold (this value is divided into 7 categories according to municipalities), the non-taxable deduction benefits only the threshold defined in the draft.

So, in simpler terms, if the value of the house is lower than twice the deduction threshold, the tax will be calculated for 50% of the value. If the value of the house is above twice the deduction threshold, the citizen will only benefit from the deduction threshold as a non-taxable value. So in this case, he does not benefit from 50% of the value of the house, as non-taxable.

"The first home deduction excludes from taxation a portion of the value of the first home. For homes with a value up to twice the deduction threshold, the tax is calculated only on 50% of the value of the home. As a result, the individual is obliged to pay only half (1/2) of the tax that he would pay if the property were not his first home. For first homes with a higher value, only the portion of the value corresponding to the deduction threshold is excluded from taxation and the tax is calculated on the portion of the value that exceeds this threshold," the draft report explains.

The maximum deduction threshold is proposed to be divided into 7 categories of municipalities. The first category includes the municipality of Tirana with a maximum non-taxable threshold of up to 8.4 million lek. The second category includes the municipalities of Durrës, Himara, Vlorë, Saranda with a maximum non-taxable threshold of 4,750,000 lek.

For example, if a citizen owns a property in Tirana, such as a primary residence worth 10 million lek, the tax will be calculated on half of the value of the house. Since the value of the house (10 million lek) is below twice the non-taxable threshold (8.4 million lek x2 = 16.8 million lek).

In this case, if we calculate the liability with one of the proposed tax rates of 0.1%, it will be 5,000 lek per year (5 million lek, which is half the value of the house, since the citizen benefits from a tax-free deduction of 50% of the value x 0.1% = 5,000 lek per year.

If a citizen benefits from a 50% discount on the value of the non-taxable home, the building tax liability will not change from what they currently pay.

The current formula calculates the building tax liability as 0.05% of the value of the house. The value of the house is calculated on the basis of reference prices. For Tirana, new fiscal prices were approved for 32 cadastral areas in 2023.

According to Monitor's calculations, the building tax liability in Tirana, calculated on the basis of the new reference prices, ranges from 3,600 lek to 10,200 lek per year, depending on the cadastral zones. The calculation was made for an apartment with an area of ??90 m2.

Whereas with the new formula, if for an apartment worth 20 million lek, over twice the deductible threshold (8.4 million lek x2 = 16.8 million lek), the citizen does not benefit from a non-taxable deduction of 50% of the value of the house, but only the allowed threshold.

20 million lek (value of the house) - 8.4 million lek (deduction threshold for the Municipality of Tirana) = 11.6 million lek (is the value of the house on which the tax is calculated) x 0.1% (proposed tax level) = 11,600 lek per year, the new obligation to be paid./Monitor