Deputy minister of roads and urban development says in light of the arguments made by builders, construction companies, architects and experts at the ministry, the Majlis passed a law levying direct taxes on real estate.
“However, implementing the law is of essence and should be such that it boosts the housing market. For instance tax authorities say they have still not been able to fully identify all vacant houses and charge (tax) them. So appropriate measures must be taken to cope with the market until an effective method is in place,” Hamed Mazaherian told ISNA.
He opined that like all Iranians home builders must also pay tax, and the “national tax administration is in charge of developing a transparent tax regime and clear-cut package for the key sector.”
The official did not elaborate. However, the issue of taxing the massive housing sector has been a major issue for years and successive governments have talked about “getting tough” with the builders, big landowners and especially land speculators who reportedly are among the richest men in all major Iranian cities.
The problem is that almost all of them are averse to paying tax and infamous for tax evasion and cooking the books. In the not too distant past real estate brokers and builders used to leave their property vacant when the economy was in recession and there were few buyers.
It is reported that home construction has declined by 67% in the past 3-4 years and a surge in demand seems likely in the near future. Mazaherian reiterated that the housing market is in recession and demand will depend largely on factors at macro level.
“Increase in GDP as a result of investment growth can and should pull the market out of recession.”
The housing industry has been struggling for sometime as first time homebuyers and others and playing safe in the hope that the nuclear deal between Iran and the six world powers would “balance” the chaotic real estate market in which prices have gone through the roof. The situation has been such that almost all working people simply cannot afford to buy a 50 sq meter apartment even in the remote parts of big cities.
Banks also have also been a hopeless entity because the high-interest loans they offer hardly make up for five-ten percent of the price of any purchase. However, in recent weeks there has been talk about raising the loan ceiling by about 300% to help first time buyers and in the process stimulate the sluggish housing market.
Recent reform in direct tax laws requires homeowners in cities with more than 100,000 residents to pay tax for their vacant properties.
Iran’s housing industry contributes to almost 20% of the gross domestic product and employs 13% of the total working population.
