Returns in USD and GEL: How to Account for Currency Risk

Returns in USD and GEL: what's at stake 💱

Many property listings and rental agreements in Georgia are denominated in US dollars, while taxes, maintenance and living costs are paid in Georgian lari. Currency moves can change your real return and purchasing power. This guide shows how to account for that risk and make practical decisions.

Why currency risk matters 📌

• Income in one currency and expenses in another create exposure: a favorable exchange move increases real gains, an adverse move reduces them.
• Short-term fluctuations can be noisy; long-term trends determine purchasing power.
• Misjudging currency exposure causes budgeting and tax surprises.

How to calculate returns across currencies 📊

1. List cash flows clearly: rental income (USD), operating costs (GEL), taxes (GEL), capital expenses (either).
2. Choose a base currency for analysis — GEL if you spend locally, USD if you plan to repatriate funds. Convert all cash flows to that base to compare apples to apples.
3. Model scenarios: optimistic, neutral, and pessimistic exchange-rate paths to see a return range rather than a single number.
4. Remember conversion costs and bank fees — they reduce net return, especially on frequent transfers.

Practical tactics to reduce currency risk 🛡️

• Collect mixed-currency rent where possible: some tenants pay in GEL, others in USD.
• Keep reserves in USD if you expect to preserve value or pay dollar-denominated expenses.
• Use lease clauses that allow indexation or adjustment based on inflation or FX markers.
• Be flexible on pricing: shorter review periods can help react to rapid currency moves.

Is hedging right for you? 🔁

Hedging instruments exist, but they come with costs and complexity. For many private investors, simple measures are preferable:

• Dollar savings as a basic hedge.
• Avoid complex derivatives unless advised by a professional and you understand the costs.
• Natural hedges: match dollar expenses with dollar income where feasible.

Taxes and banking realities in Georgia 🇬🇪

• Taxes are typically calculated in GEL; keep records of exchange rates used for conversions.
• Talk to an accountant about documenting FX gains or losses and timing conversions to manage tax exposure.
• Check bank charges and transfer limits before moving funds internationally.

Real-life scenarios and examples 🧭

• Scenario A — income in USD, costs in GEL: if GEL strengthens, your dollar income buys less locally; if GEL weakens, your local buying power improves. Evaluate both outcomes.
• Scenario B — mixed income: having part of rent in GEL helps cover local costs reliably; USD income can act as a store of value.

Checklist for buyers and investors ✅

• Decide your primary currency exposure (GEL or USD).
• Run best/middle/worst FX scenarios for expected cash flows.
• Include currency conversations in lease agreements (indexation clauses, review periods).
• Clarify banking fees and conversion timing with your bank.
• Consult a tax specialist to handle documented FX movements.

Final thoughts — balance caution with opportunity 🤝

Currency risk is manageable with simple tools and planning. The goal is not to eliminate risk completely but to understand it and choose strategies that match your tolerance and time horizon.

If you’d like, we can run a scenario analysis for a particular property and show how returns change under different FX moves. Browse available listings or start a search on our site: https://buyhome.ge/en/search

Contact BuyHome for a friendly consultation — we’ll help you choose property and calculate real returns considering currency risk. 🏠💬