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Lobbies Behind Capital Gains Tax Removal
Economy, Domestic Economy

Lobbies Behind Capital Gains Tax Removal

A lawmaker has criticized the parliament’s decision to remove a capital gains tax on property sales.

Ahmad Tavakoli, who is a member of planning, budget and auditing committee, blamed “powerful lobbies and vested interests” for removing the 28% sales tax.
The decision was made recently in a parliamentary session during which the lawmakers discussed proposed changes to the tax law.
The conservative MP asserted that the law would be revised due to its numerous deficiencies before the end of the current Iranian year (ending March 20, 2014).
Tavakoli said that the parliament’s economic committee has produced a weak legislation through its modification of the existing tax regulations.
Iran is currently facing a housing crisis, as property ownership has been steadily declining. Back in 1986, seventy percent of families in urban areas owned a house while the figure fell to 56% in 2011.
A comparison of figures shows that in 1986, only 8 percent were looking for homes in the rental market, while the number soared to 50% during a five-year period from 2006 to 2011.
For residents of the capital city, finding a suitable home in the metropolis of 12.2 million is often a test of physical and mental endurance. Rapid urbanization and constant high demand has seen rent prices soar in recent years, a trend only exacerbated by inflation and a free-falling currency.
Since 2009, the country has had no tax on the sale of real estate assets. However, a capital gains tax was introduced with the implementation of the 2010 economic reform plan, before being removed recently by lawmakers.
Rental income is subject to real estate income tax in the country. A fixed deduction of 25% of the gross income is extended to all taxpayers to account for income-generating expenses. The net income, which is 75% of the gross rent, is then subject to the same rates. Rental income is exempt from real estate tax if the property is A residential and measures up to 150 square meters if it is located in Tehran (up to 200 square meters if it is located in other parts of the country).

 

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