The lengthy study, published on the official website of the research department, reviews theoretical concepts concerning tax and its link with different aspects of capital in the housing market. It then goes over tax on lands and homes in a number of selected countries in addition to Iran.
In the next step, the study proposes reforms concerning tax laws and introduces new ones. It reviews housing taxes and fundamental ways of reforming them, puts out technical proposals to reform and complete direct tax laws, and points out that a number of laws are unable to combat speculative activities in the housing sector and pay little to no attention to housing problems of vulnerable groups.
It deals with rents and tenants as it delineates why characteristics of tax exemption concerning rent incomes are disproportionate and proposes that a portion of housing tax incomes be allocated as subsidies to tenants, according to Financial Tribune.
“The results of this study have shown that capital gain tax is one of the most important policymaking instruments for controlling fluctuations in the housing market, which has yielded successful results in different countries,” the study says in the concluding section.
“Levying this tax will entail sectoral and trans-sectoral positive effects that will lead to improved performance and efficiency in the housing sector. What’s more, controlling housing fluctuations and speculative activities will redirect a significant portion of capitals to productive economic sectors, which boost manufacturing and employment,” it adds.
The report noted that it has been proved that not only housing taxes do not lead to higher home prices and rents, but they are powerful tools to control prices if they are levied effectively. An increased share of tax on lands and properties from total taxes will have a “decisive effect” in increasing the growth of housing sector.
The study then presents its tax scheme for the housing sector in 17 articles and says that it will help control speculative activities in the housing sector, provide shelter, encourage non-disruptive housing assets, increase tax capacities and eliminate the adverse effect of holding homes as assets, among other things.
The comprehensive plan proposes that previously eliminated taxes, including annual property tax, arid land tax and empty home tax, be reinstated, stressing that this will positively affect the housing market and boost the overall tax rate of the plan.
In order to improve the effectiveness of property tax and accomplish goals of income distribution, the plan has put forth a proposition to make changes to existing conditions, which will “help establish stability in the rental housing market and rent prices”.
Ultimately, the research arm of Economy Ministry says the value-added tax law should become an important source of boosting tax base and tax incomes. It notes that the proposed plan will prevent home prices from increasing for low-income groups and control speculative activities, as a portion of “accidental incomes” will be absorbed as tax and gains from housing assets that are usually subject to speculative activities.