Starting next year, individuals renting out their apartments in Azerbaijan will be required to pay a 10 percent income tax on rental income – a provision included in the draft state budget for 2026.
The measure has sparked debate over whether it will push up rental prices in Baku’s already tight housing market.
According to Ramil Osmanli, head of the Real Estate Expertise Center, the new tax will not have a direct effect on rents.
“Economically speaking, this step won’t cause prices to rise or fall,” Osmanli told local media. “However, it will lead to an increase in the number of formal rental contracts. Previously, the rental tax stood at 14 percent, and many landlords avoided registering agreements. Reducing it to 10 percent could bring more transparency to the market.”
Osmanli added that for a more dynamic incentive, the rate could be lowered even further.
“If the government set it at around 4 percent, we could expect at least 80 to 90 percent of rental agreements to become official,” he said.
Experts note that beyond its fiscal goal, the reform aims to bring the shadow housing market into the legal framework – an important step toward regulating the country’s fast-growing urban rental sector.
