A total of three million households have registered their properties on the National Property and Housing Database so far, Minister of Roads and Urban Development Mohammad Eslami said on Monday.
“The ministry has identified 1.3 million empty homes and according to the law of the country, the Iranian National Tax Administration is required to start taxing them as of July 23,” he was quoted as saying by the Persian daily Etemad.
“Psychological propaganda created around the National Property and Housing Database has discouraged many people from submitting their housing information to the ministry; very few people have registered on the database.”
Heads of households, whether homeowner or renter, were asked to register their properties online in two months by visiting the National Property and Housing website — http://amlak.mrud.ir — as of April 8, according to deputy minister of roads and urban development, Mahmoud Mahmoudzadeh.
“Vacancy tax for real entities will be six times more than the rent of the property in the first year, 12 times more than the rent of the property in the second year and 18 times more than the rent of the property in the third year. For legal entities, vacancy tax has been set at 12 times more than the rent of the property in the first year, 24 times more than the rent of the property in the second year, and 36 times more than the rent of the property in the third year,” he was quoted as saying by IRNA on March 29.
This comes as Mehr News Agency quoted Omid Ali Parsa, the head of the Iranian National Tax Administration, as saying on March 23 that, “The first vacancy tax will be levied in the Iranian month starting July 23 and it will be half the value of the monthly rent of the property.”
The Guardians Council – an oversight body that ensures laws are in line with the Iranian Constitution and the Sharia — approved the parliament’s bill on revisions to Article 54 of Direct Tax Code, aka vacancy tax, in December.
Abbasali Kadkhodaei, the council spokesman, tweeted that the parliament’s revised proposal on taxing empty homes was not found to be against the Sharia and Iran’s Constitution.
The Iranian Parliament approved the proposal on August 5. The final approval came after the council returned the vacancy tax bill to the Majlis on August 12, citing ambiguities and calling for amendments to the document.
Revenues that will be collected from the taxation of empty homes will go to the National Housing Fund to finance loans to low-income households, Mahmoudzadeh noted that the National Property and Housing Database was designed not solely to tax vacant homes; the main implication of designing the website would be to identify the housing conditions of Iranian families for future plans.
“Article 54 of Direct Tax Code provides that failure to register one’s housing information according to the instructions will result in the discontinuation of a number of public services, including cash subsidies, opening of bank account, passport and vehicle registration plate services,” he threatened.
Overestimation
Since the very beginning, housing experts had warned that identifying empty homes would be the main challenge in the way of enforcing the vacancy tax. The figure announced by officials as their initial estimate of empty residential units (2.58 million) was overly optimistic, Mehdi Soltan-Mohammadi, a housing expert, said.
“We believe that Population and Housing Census is not an effective tool when it comes to identifying empty properties. Census takers who visit homes might record a home as vacant if no one lives there or neighbors say so. The fact of the matter is that many of these homes might not be empty at all. Furthermore, housing market was in recession in the Iranian year 2016-17, when the census was conducted, and a large number of new homes, including those built under Mehr Housing Project, were unsalable. Statistics pertaining to that year falsely suggested that empty homes would solve the longstanding housing problem,” he added.
Noting that the attractive aspect of investment in housing is gaining income from renting the property, Soltan-Mohammadi said expecting homeowners to forgo the rental income does not seem reasonable.
“It’s like buying shares or opening a deposit account but not seeking to make profit. A small percentage of homes might be left vacant during repairs or house moves or before being sold,” he said.
“Housing is a commodity purchased with the aim of making profit and also consumption. If there was no inflation, people would have preferred to save their money in banks given that the gross income from renting is 4% annually while monthly interest on savings stands at 20%. Dividing consumption demand and investment demand in the housing sector is not a clear concept. Speculative investment in housing increases when home prices rise rapidly. Not just the housing sector, other markets like gold, foreign currency and even car market also heat up as people have to safeguard their money’s value.”
Soltan-Mohammadi noted that the best policy the government can pursue is by controlling inflation.
“There are a few countries in the world with an inflation rate above 40%. Challenges regarding the housing market won’t be resolved as long as the prices of construction materials increase 100% or the costs of other construction inputs, including municipality duties, water and electricity subscriptions, etc. keep rising,” he concluded.
