Property tax will change, and its value will increase. The government has already prepared the new draft law ‘On Real Estate Tax’, which switches to a property taxation system based on market prices. The more expensive the property, the higher the tax, and the more centrally located it is, the more it will be taxed.

“The real estate tax based on market value is a fair tax. The tax regime currently implemented in Albania imposes the same tax burden in many cases on a person who has real estate in the city center, as well as a person who has real estate with the same characteristics, but on the outskirts of the city, with a lower market value,” the report says.

According to the Ministry of Finance, this method of property taxation has strong potential for increasing revenues.

“The real estate tax should be strengthened and transformed into the primary pillar of local revenues in the future, guaranteeing a more stable, fairer and more predictable source of income for municipalities,” the report states.

In addition to the fact that taxation will be based on the market value of the property, the rate will also change, from 0.05%, which is currently 0.1% -0.2% of its value.

“For all building units included in the category of ‘residential buildings’, the tax rate may vary from 0.1% (zero point one percent) to 0.2% (zero point two percent),” it states.

In fact, according to the arguments given for this taxation formula based on market value, the government also aims to curb speculation in property prices. “In this context, it could also discourage unjustified inflation of real estate prices. The new property tax will constitute a high cost for owners and could make speculation at prices rarer,” the report continues.

Through this draft law, the country is divided into 7 zones, which will be used to reduce the tax on first homes. This new tax reform will weigh more heavily on second homes.