According to The Serbian Economist, Albania’s Ministry of Finance has submitted a draft bill for public discussion that would increase property taxes and revise the system of tax breaks for homeowners.
Under the proposal, the tax on residential real estate could rise from the current 0.05% of the property’s value to 0.1–0.2%. Higher rates are also proposed for commercial properties, with the total tax burden depending on the property category and its intended use.
One of the key changes concerns owners of second and subsequent properties. If the property is not their primary residence, tax exemptions will not apply. Thus, owners of vacation homes, investment apartments, and additional housing will have to pay the full rate.
In effect, the government is attempting to distinguish between social housing and investment real estate. For families who own only one apartment, the tax increase may be partially offset. For owners of multiple properties, the tax burden will rise more significantly.
The reform is particularly important for Albania’s real estate market, where housing prices have risen rapidly in recent years in Tirana, Durres, Vlora, Saranda, and other locations linked to tourism and investment demand. Amid active construction, interest from foreign buyers, and the growth of short-term rentals, the government is seeking to increase local budget revenues and align property taxation more closely with the market value of assets.
Albania is gradually transitioning from the old model of fixed or low taxes to a more modern system where the tax base is tied to the property’s value. This approach is in line with the recommendations of international financial organizations, but it could prove painful for property owners, especially if the cadastral and market valuations of residential properties are revised upward.
For foreign investors, these changes mean that the annual cost of maintaining a second home on the coast or an investment property in Tirana will become somewhat more expensive. That said, even after the increase, the tax burden in Albania will remain relatively moderate compared to many EU countries.
The key question for the market is how exactly the authorities will assess property values and how quickly the new system will be implemented in practice.
The Albanian real estate market remains one of the most dynamic in the Balkans. Growth in tourism, the development of coastal cities, and interest from foreigners are sustaining demand; however, the tax increase could gradually cool speculative purchases and widen the gap between residential housing and investment real estate.
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