Vacancy Tax Earnings to Be Spent on Low-Income Housing

EghtesadOnline: Revenues collected from the taxation of empty homes will be injected in the National Housing Fund to be extended as loans to low-income households.

News ID: ۷۸۶۳۴۲

14 April 2021

According to Deputy Roads and Urban Development Minister Mahmoud Mahmoudzadeh, the National Property and Housing Database—http://amlak.mrud.ir—was not designed for only taxing vacant homes; the main implication of designing the website is to identify the housing conditions of Iranian families for devising future plans.

“Article 54 of Direct Tax Code [vacancy tax] 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 bank account, getting a passport and vehicle nameplate registration,” he was quoted as saying by Eqtesad Online.

In a newly devised measure, heads of the households, whether homeowner or renter, are obliged to register their properties online in two months by visiting the National Property and Housing website.

According to Mahmoudzadeh, households owning more than two residential properties (one in the city or village of their permanent residency and the other in the city or village where their second home is located) will be subject to vacancy tax if they are unoccupied for more than 120 days.

“Vacancy tax for real entities will be six times more than the value of the property’s rent in the first year, 12 times more than the value of the property’s rent in the second year and 18 times more than the value of the property’s rent in the third year.

“For legal entities, vacancy tax has been set at 12 times the value of the property’s rent in the first year, 24 times more than the value of the property’s rent in the second year and 36 times more than the value of the property’s rent 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, said on March 23, “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.”

“A total of 1.3 million empty homes subject to vacancy tax were made known to INTA during the Iranian year ending March 20,” Minister of Roads and Urban Development Mohammad Eslami said.

“According to a report by the Association of Realtors, measures taken by the ministry resulted in a 25% decline in home prices in the fourth quarter of last year [Dec. 21, 2020-March 20].”

The Guardians Council–an oversight body that ensures laws comply with the Iranian Constitution and Islamic law—approved the parliament’s bill on revisions to Article 54 of Direct Tax Code, i.e., 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 Iranian Constitution and Islamic law.

The Iranian Parliament approved the proposal on August 5.

The final approval came later when the council returned the vacancy tax bill to the Majlis on August 12, citing "ambiguities" and called for amendments to the document.

The government has projected earning 2,000 billion rials ($8 million) from vacancy tax on empty home), Mehr News Agency reported.