All real estate properties in Albania, whether residential units or business premises, will be taxed according to their market value under a new draft law proposed by the Ministry of Finance and submitted for public consultation.

According to the draft legislation, the taxable base for the property tax will be the assessed value of the property.

Residential buildings will be subject to a tax rate ranging from 0.1% to 0.2%, while buildings used for economic activities will be taxed between 0.15% and 0.25%.

As for residential properties, the draft law introduces a tax relief mechanism for an individual’s primary residence.

Specifically, Article 8 of the draft law states that the deduction applies only to the taxpayer’s first home. The deduction will be equal to 50% of the assessed value of the primary residence, but in all cases it may not exceed the maximum deduction threshold approved by the Municipal Council.

For primary residences valued at up to twice the deduction threshold, the tax will be calculated on only 50% of the property’s value. As a result, homeowners will be required to pay only half of the tax they would otherwise owe if the property were not considered their primary residence.

For first homes with a value exceeding that threshold, only the portion of the value corresponding to the deduction limit will be exempt from taxation, while the tax will be calculated on the amount exceeding the threshold.

The draft law also allows Municipal Councils to increase the maximum deduction threshold by up to 20% through a justified decision. Such an increase may only be applied in exceptional circumstances, with the aim of mitigating the immediate impact of higher property taxes resulting from unusual increases in housing values.