Azerbaijan is expected to reduce the income tax rate on rental payments for individuals from 14% to 10% starting next year. But how will this change influence the rental market?
Real estate expert Elnur Farzaliyev discussed the impact in a comment to Patrul.az.
According to Farzaliyev, beginning in 2026, the tax applied to rental income earned by individuals will decrease to 10%, making the system more favorable for landlords.
He emphasized that all rental agreements must be notarized, ensuring clear documentation of the rights and obligations of both parties.
“A notarized contract helps resolve future disputes legally and efficiently. If either party violates the terms, they bear legal responsibility,” he said.
Why notarized contracts matter
Farzaliyev noted that many issues in the rental market arise from informal or poorly drafted agreements. Common problems include:
landlords increasing rent before the contract expires,
terminating agreements early to sell the apartment,
tenants intentionally damaging property and causing financial losses.
“This is why notarized agreements are essential—they protect both the landlord and the tenant,” he added.
Legal and financial advantages
The expert explained that starting in 2026, 10% tax will be deducted from the landlord’s rental income, making the tax burden lighter compared to the current 14%.
He also highlighted that notarized contracts can protect landlords in cases where criminal incidents take place in a rented apartment:
“A notarized contract proves that the apartment was legally rented out and shields the owner from legal liability.”
Safety and identification requirements
Farzaliyev pointed out that rental agreements should include copies of tenants’ ID cards, which must be submitted to the local neighborhood police officer.
This requirement is crucial for public safety:
it allows law enforcement to know who resides at a specific address,
it is vital during emergencies such as crimes, accidents, natural disasters, or wartime events.
Overall impact on the rental market
According to the expert, the tax reduction – combined with formalized rental contracts—will make renting more transparent, legally secure, and economically attractive for property owners, while improving accountability and safety across the sector.
