New real estate tax 2026: what changes for businesses and owners

Property tax is one of the most important local taxes in the world and the primary source of revenue for many municipalities. In Albania, it has remained far from reaching this potential. In 2025, revenues from this tax amounted to about 7.5 billion lek, or approximately 0.281 TP3T of the Gross Domestic Product.

On June 17, 2026, the Ministry of Finance published for public consultation on a draft law which fundamentally changes the way property is taxed in Albania. The main change is the shift from a system based on reference values and surface area to a system based on the approximate market value of the property.

In this article, we will explain what is being taxed today, what specifically is changing, what this will mean in figures for businesses and owners, what the deadlines are, and how you can participate in the consultation. The goal is to give you a complete, clear, and dilemma-free overview, because the direction of change is clear even though the implementation date is several years away.

How is property taxed today

The current system is regulated by law no. 9632, dated 30.10.2006 “On the local tax system”. It divides the property's plot into several parts. Buildings are taxed based on a calculated value according to a reference price per square meter, multiplied by the area and a coefficient. Lands are taxed based on area, in Albanian lek per hectare or per square meter.

The current property tax rate is 0.051 TP3T for residential buildings and 0.21 TP3T for buildings used for economic activities. Municipalities may adjust this rate by plus or minus 0.301 TP3T.

The main problem with this system is that reference values are rarely updated and do not reflect the real market value. As a result, a property in the city center and a property with the same area in the suburbs often pay the same tax, despite their market value being very different. This is precisely the inequality that the new bill aims to solve.

What fundamentally changes and the new concepts

The draft law establishes a single principle. All real estate, buildings or land, will be taxed on their approximate market value. This replaces both the reference value system for buildings and the surface tax for land.

To understand the new system, it helps to know some new concepts.

New tax base concepts

The tax base will be the taxable value of the asset. Taxable value is the appraised value of the property, or the value remaining after a legally allowed deduction.

The estimated value is an approximation of the market value. It will be determined according to a methodology to be approved by the Council of Ministers. The market value, in turn, is the sum for which the property would be sold between a willing and well-informed buyer and seller.

To achieve this value, new infrastructure is being created. The State Cadastre Agency prepares valuation maps, where the territory is divided into value zones and each zone is assigned a reference price per square meter. All data will be kept in a new central database called the Fiscal Cadastre.

Another important expansion is the tax base. In addition to categories taxed today, the new system foresees the taxation of forest lands, pastures, meadows, and other undeveloped lands that are not currently taxed.

Residential building or commercial building

The draft law defines six tax categories. Four are for land and two are for buildings, residential buildings, and buildings for economic activities. This division is important because each category has its own tax rate.

A residential building is any unit used for housing needs, whether permanent or temporary. This includes basements, garages, and enclosed parking spaces that serve residents, as well as units rented long-term for housing.

Building for economic activities is any unit used for production, trade, services, professions, or other economic activities. There is a point here that should be particularly emphasized. Residential buildings used to provide accommodation services for tourists are classified as buildings for economic activities according to tourism legislation.

In practice, this means that an apartment rented out for short-term tourist accommodation will no longer be treated as a residence. It will fall into the category of buildings for economic activities and will be taxed at the highest rate for this category.

New tax brackets and comparison

Each Municipal Council will set the tax rate for each category within the limits set by law. The table below summarizes the proposed limits.

Tax Category	The tax rate brackets
Agricultural and livestock land	0.05% to 0.15%
Forest land	0.05% to 0.15%
Land plot	0.075% to 0.175%
Land for other uses	0.075% to 0.175%
Residential building	0.1% to 0.2%
Commercial building	0.15% to 0.25%

The comparison with today shows two movements at the same time. The rate for housing is proposed to increase from 0.05% in an interval of 0.1% to 0.2%. The rate for economic activity rises from 0.2% to an interval of 0.15% to 0.25%. But the biggest change isn't in the rate. It's in the base, because the tax will be calculated on market value, which is usually higher than the reference value used today.

Comparison with the region helps provide context. The allowed levels range from 0.151 TP3T to 11 TP3T in Kosovo, from 0.251 TP3T to 11 TP3T in Montenegro, around 0.41 TP3T in Serbia, and from 0.11 TP3T to 0.21 TP3T in North Macedonia. In this comparison, the proposed limits for Albania remain among the lowest.

By how much in figures

The figures below are illustrative. The actual value will depend on the valuation methodology, which has yet to be approved, and on the rate that each municipality will set.

Let's take a residential apartment with a market value of 12,000,000 lek in Tirana that is the owner's primary residence. With the 50% deduction for the primary residence, the taxable value falls to 6,000,000 lek. If the municipality sets the rate at 0.11%, the annual tax is 6,000 lek. If the rate is 0.21%, the tax is 12,000 lek.

We now take a business environment with a market value of 20,000,000 lek. The discount for the first residence does not apply, because it is only for an individual's first residence. At a rate of 0.151 TP3T, the annual tax is 30,000 lek. At a rate of 0.251 TP3T, the tax is 50,000 lek.

These examples show the new logic. The higher the market value of the property and the higher the scale set by the municipality, the higher the tax. A property in the city center will pay more than the same property in the suburbs because the market value is higher.

Building tax for businesses, how it is calculated and managed

For businesses, the most important component is the tax on buildings used for economic activities. The calculation is straightforward. The taxable value of the property is multiplied by the applicable tax rate, set by the municipality within the range of 0.15% to 0.25%.

The obligation for businesses increases from two sides. On one hand, the base is no longer the reference value, but the market value, which is usually higher. On the other hand, the draft law deliberately aims for a wider gap between residential and business properties, because commercial properties amortize municipal infrastructure and services more.

How is this obligation managed practically? First, the business must know precisely which category each of its properties falls into, because an apartment used for tourist accommodation is taxed as business property, not residential property. Second, it must plan the tax as a fixed annual expense, paid regardless of the property's utilization level. Third, it must carefully verify the assessment notice issued by the municipality, as there may be errors in the valuation or category, and there is a deadline for appeal.

First-time homebuyer's deduction

One of the protective innovations of the draft law is the deduction for an individual's primary residence. The deduction is equal to 50% of the residence's assessed value, but it cannot exceed a maximum threshold that varies by municipality.

Maximum thresholds are divided into seven bracket categories. For Tirana the threshold is 8,400,000 lekë. Next are 4,750,000 lekë for the second group, 3,550,000 lekë for the third, 2,800,000 lekë for the fourth, 2,050,000 lekë for the fifth, 1,450,000 lekë for the sixth, and 750,000 lekë for the seventh. The Municipal Council may raise the threshold by up to 20% with a reasoned decision.

An individual who has only one residence benefits from the deduction automatically, without any action. An individual who has more than one residence must self-declare to the municipality by June 30 of the year before the tax year, which is their primary residence.

Tax Exemptions

The draft law provides for a list of exemptions. Exempted are state assets, religious real estate, unfinished buildings within the permit deadline, residences of families receiving economic assistance, residences of sole-earner pensioners, social housing, diplomatic mission assets on a reciprocal basis, and linear infrastructure.

The exemption for religious property is not new. Even today, buildings used by religious communities for their activities are exempt. The draft law maintains this treatment and defines it more broadly as religious real estate, including places of worship and associated plots.

An exception worth noting is for hotel or resort accommodation structures with four and five stars and special status, which hold a recognized international trademark. These structures are exempt from taxes for a period of 10 years, starting from the year of commencement of economic activity and no later than three years from the acquisition of special status.

There is also an important rule regarding state-owned property. The exemption does not apply when state-owned property is leased or used for profit-making purposes by private parties. In such cases, the property is taxed normally.

Who pays the tax, the owner or the tenant

This is one of those questions that in practice confuses many businesses, especially those operating in rented premises. The legal answer is clear.

For a private property, the taxpayer is the registered owner of the property, or in the absence of registration, the person holding the ownership document. Therefore, for a business premises rented from a private owner, the legal obligation for the tax remains with the owner, not the tenant.

The only case where the user bears the obligation is when the property is state-owned and leased or used by a private individual. In this case, the draft law explicitly charges the private user with the payment of the tax.

However, in real life, many rental contracts stipulate that the tenant pays the property tax. This is a contractual agreement between the parties, not a legal obligation. Therefore, our practical advice is simple. Read the rental contract carefully, because the law charges the owner, but the contract can transfer the cost to you.

General Directorate of Property Tax and Fiscal Cadastre

The draft law creates a new central structure, the General Directorate of Property Tax. It is a public legal entity, subordinate to the minister responsible for finance.

Its main responsibilities are the administration of the Fiscal Cadastre, as well as leading and supporting municipalities in implementing property tax legislation. The goal is to overcome the current fragmentation, where each municipality operates with different practices and without a common system.

The concrete administration of the tax, i.e., registration, assessment, calculation, notification, and collection, remains the responsibility of the municipality in whose territory the property is located. Therefore, the new model is co-administration between the central and local levels.

Key deadlines and implementation schedule

The most important point for business certainty is the implementation schedule. The new system on market value does not take effect immediately. It applies from the 2029 tax year for buildings and from the 2031 tax year for land. Until then, the transitional rules and current rates remain in effect, namely 0.051 TP3T for residential and 0.21 TP3T for business.

Within a tax year, the main deadlines of the new system are as follows. The municipality calculates the tax on the last day of February and generates notifications no later than March 7. The tax is paid in two equal installments, by June 30 and by September 30.

There are also some other deadlines to note. The Municipal Council approves tax rates no later than January 31st. An individual with more than one residence declares their primary residence by June 30th of the preceding year. Appeals to the assessment notice can be filed by December 31st of the tax year.

Suspension of services for debtors

The draft law introduces a new enforcement mechanism. Debtors who have not fully paid their obligations will not be offered certain services, not only by the municipality but also by some central institutions.

The central institutions suspending services are the State Land Registry Agency, the Agency for Territorial Development, the National Business Center, and the Directorate of Road Transport Public Services. Services related to the provision of official information or the issuance of copies and certificates are not suspended.

For businesses, this is a significant point. Unpaid property tax obligations can block actions at the National Business Center or the Cadastre. Likewise, during the transitional period, the Cadastre will not register a property document if it is not accompanied by a municipal certificate confirming the payment of obligations for that property.

What can your business do now

Although full implementation will take several years, preparation begins today. Some actions are beneficial right now.

And lastly, make a list of all properties your business owns or uses, and identify the category of each. Pay special attention to any residential property used for tourist accommodation, as it will be taxed as business property.

Second, review the lease agreements. Check who is responsible for property taxes according to the contract, as this directly affects your costs.

It's a hassle, start treating property tax as an annual planned expense in your budget, not a surprise. The sooner you have an approximate estimate, the better liquidity is planned.

Fourth, participate in the public consultation if you have specific concerns, as the text can still change.

How to participate in the public consultation

The public consultation on the draft law is open from June 17 to July 15, 2026. You can submit comments through the Electronic Register for Public Announcements and Consultations, at the page publicconsultation.gov.al, in the details of consultation no. 995. The proposing institution is the Ministry of Finance.

Participation is not merely formal. Concrete comments from businesses can lead to improvements in the final text, especially on practical matters such as the assessment methodology and implementation deadlines.

Why it Matters

The real estate tax affects almost every business and every family that owns property. Moving to market value means a fairer tax base, but also a liability that for many properties will be higher than it is today, especially in high-value areas.

The good news is the timing. The new system is implemented in 2029 for buildings and 2031 for land. This gives you room to plan, adjust contracts, and understand where each property will be classified. Businesses that prepare early will be in the best position when the new tax takes effect.

Frequently asked questions

Is this new tax being applied now?

Yes. The draft bill is under public consultation and has no legal force. Even after approval, the market value tax will be applied from the 2029 tax year for buildings and from 2031 for land. Until then, the current rates will continue.

How will taxes be calculated for my business?

The tax will be calculated by multiplying the property's assessed value by the tax rate set by the municipality. For buildings used in economic activity, the rate will be within the range of 0.15% to 0.25% of the value.

How will my apartment that I rent out for tourism be taxed?

According to the draft law, residential buildings used for tourist accommodation are classified as buildings for economic activities. Therefore, they will be taxed at the highest rate for this category, not at the residential rate.

Does the landlord or tenant pay the rental property tax?

Legally, for private property, the owner pays the tax. The tenant only pays it when the property is state-owned and leased to a private individual. In private leases, the contract can transfer the cost to the tenant, but this is a contractual agreement, not a legal obligation.

What is the first-home owner's grant?

It is a 50% deduction from the value of an individual's primary residence, up to a maximum threshold that varies by municipality. An individual with a single residence automatically qualifies, while someone with multiple residences must self-declare their primary residence.

What happens if I don't pay the tax?

Daily default interest is applied to the outstanding amount. In addition, the debtor may have services suspended by the municipality and central institutions such as the National Business Center and the State Cadastre Agency until full payment.

How can I give my opinion on the draft law?

Comments will be submitted by July 15, 2026, through the platform konsultimipublik.gov.al, under consultation number 995 of the Ministry of Finance.

Read also: Withholding tax on rent, a practical guide for businesses in Albania