Threat of housing intermediaries with the new tax law

The first sign of the destructive competition of housing policymakers with the private sector and real estate intermediaries was included in the law on vacant houses. Housing policymakers are set to enter the pricing law as a new actor in pricing, in which case the hidden and, of course, strategic mistake of destructive competition with the private sector in the vacant home tax law will be exposed. The entry of the policymaker into Housing pricing The most important hidden sign of the law amending Article (repeated 54) ‌ is the law of direct taxes or the tax on vacant houses, which is lost in the tumult of the process of passing this law. With the introduction of a new note to the Empty House Tax Act, the destructive competition of policymakers became legal, and a note added to the law to satisfy the Guardian Council officially introduced the Ministry of Roads and Urban Development into the pricing field.

Pursuant to Note 3 of Article 54 of the Law on Direct Taxes, the Ministry of Roads and Urban Development is obliged to launch and implement a new system within a maximum of three months of the implementation of this law to serve as a reference site for renting by landlords or Sale of property Be. The real estate transaction system should be designed in such a way that it is possible to value residential units at current prices in the area, to be able to register the applicant’s request to buy or rent the property offered in it, and to register the realization or non-realization of the transaction. Accordingly, the landlord must offer his residential unit for sale or rent, within three months, at the rental value or the average daily prices of the area in a system known as the “real estate trading system”, in which case even the owners’ past taxes Uninhabited housing units in previous years will also be pardoned.

This legal note states: If the owner sells or leases his residential unit, as the case may be, at the rental value subject to Article (54) of this law or the average daily prices of the area subject to Article (64) of this law, through the trading system Property that the Ministry of Roads and Urban Development offers within the maximum three months from the entry into force of this article, using the existing facilities, launches and implements, is not subject to tax subject to this article. If the owner refuses to rent or sell his property more than twice at the mentioned prices, the said unit has been vacant since the time it has been recognized as an empty house according to the National Real Estate and Housing System, as the case is subject to tax subject to this article or fine subject to paragraph (5). Note (8) of Article (169 repeated) of this law.

Pursuant to this section of Note 3 of the Law on Receiving Taxes from Owners of Uninhabited Housing Units, the owners of these units are required to rent or sell their unit at a price permitted and “set” by the policy-maker, and if twice this If they refuse to do so, their property will be treated like a vacant unit, and not only will their exemption from being vacated in previous years be waived by offering it on the Ministry of Roads and Urban Development system, but they will also be subject to taxes and fines for the same year. This means that the owners of these units are ultimately required to rent or sell housing at a rate set by the policymaker. Although landlords and all housing market participants do not seem to be reluctant to enter the government market, “compulsion to identify vacant homes” is likely to force the files to enter.

According to another part of this note, the real estate transaction system must be designed in such a way that it is possible to value residential units at the mentioned prices, to register the applicant’s request to purchase or rent the property offered in it and to register the transaction. If necessary, the Ministry of Roads and Urban Development can use the resources allocated from the tax on vacant houses to cover the costs of upgrading and maintenance of this system, the amount of which is specified in the annual budget laws. Apart from examining the consequences of the principle of the tax law on vacant houses, which has already been addressed in various reports, if we consider only the new additional note to Article 54 of this law, the deterrent ambiguities of the legislator or policymaker are evident from two dimensions.

The first dimension refers to the paradoxical behavior of the policymaker to a story. The Ministry of Roads and Urban Development, justifying the role of real estate start-ups (virtual real estate systems) in increasing housing prices, has repeatedly banned the inclusion of prices offered by owners and landlords on these platforms. Therefore, assuming that the prices offered by the owners in the real estate trading system are made public and visible, this is a clear contradiction with the policy set by the ministry itself. If the public is allowed to announce the proposed rates in this system, then the policymaker, as a facilitator for the private sector, has entered into a destructive competition with one of the three important pillars of the country’s economy, namely the private sector.

Another dimension of the ambiguity of this supplementary note, assuming that the rate is secret to the public and restricts the publication of statistics in the real estate trading system database, is to provide conditions for excuses by some owners who want to avoid paying taxes. In fact, this group of owners can hide their claim of offering a price behind the wall of price censorship, in which case some owners can show another error of this remark by claiming that the property has been declared and not sold.

Regardless of the hidden ambiguities mentioned, in this additional note, the Ministry of Roads and Urban Development has been issued a license to transfer the housing market in order to be able to legally follow the real estate class (both in the physical market and in the virtual property systems market). In other words, destructive competition between the government and the private sector becomes legal. Among the economic markets, the housing market has always faced the least government intervention, but now it seems that with the legalization of the Ministry of Roads and Urban Development to enter the field of receiving property files and entering the pricing land, the final decree of real estate agents will be signed. However, according to some experts, if the policymaker believes in the transparency that he has repeatedly claimed, this transparency certainly existed in the past by offering prices in virtual real estate systems, and if sometimes unrealistic and unusual prices are observed in the housing market, it will certainly solve the problem. You have to look elsewhere.

The results of the studies indicate that if the prices are entered in the real estate trading system in a real way, which naturally has nothing to do with the system’s reference authority, then this error of presenting unrealistic prices in the trading system of the Ministry of Roads and Urban Development is also possible. The real prices in the housing market are the same as the prices traded in the market and the realities of the economy cannot be ignored. Therefore, with the implementation of this note from the law on taxation of owners of vacant housing units, we will face a dual policy in the housing market, a policy that believes in transparency on the one hand and violates it in practice on the other.

Studies show that this measure, if implemented, will actually lead to a threat to the business of intermediaries in the transaction market, especially its main threat to real estate startups that virtually introduce housing sales files to applicants. It is now more than 6 months since the announcement of the offer prices for the sale of housing in virtual systems. Although censorship of bids from virtual systems was done by policymakers with the intention of calming housing prices and reducing inflammation in this market, studies have shown that during this period and in the absence of bids, a large number of real sellers want to sell their apartments at a bargain price. They were real, they could not get the right price information from the market, and as a result, they temporarily stopped selling. Buyers, on the other hand, were unable to compare bid levels in the absence of bid prices. This is one of the reasons for not creating a competitive atmosphere in the market to adjust the price level in a recession. On the other hand, previous experiences in the field of pricing in various markets showed that this action has practically failed, and the entry of housing policy makers in this sector can be reminiscent of past and present bitter experiences of direct government intervention in economic markets. Because instead of the price of housing units being determined by the market mechanism and in the text of the market, it will be determined by the order of the policymaker, the result of which is clear from the beginning. Expert studies and analyzes show that the ultimate losers in the real estate market are the applicants and consumers, while pricing and grammatical measures in this regard are initially aimed at supporting real consumers and applicants. Experts believe that the result of such direct interventions by the housing policymaker in the real estate market is clear from the beginning, and this action, instead of leading to the organization of the housing market, could add new problems to this area unless the law is amended immediately. Suitable for supplying uninhabited residential units to the market.

How to identify vacant properties

Although many experts argue in identifying vacant homes and consider the error rate to be high, according to the law, homeowners in all cities with a population of more than 100,000 must register their property with the National Housing and Real Estate System. Register the country. The law on tax on vacant houses states that any Iranian can have a tax-exempt sub-residence in addition to the main residence, provided that he has registered the information of these residences in the country’s real estate and housing system. In addition, residential units whose residence and ownership information is not registered in the country’s real estate and housing system are considered as empty houses. At the same time, some housing economists believe that part of the housing market should always be empty in order to balance supply and demand, and that the idea of ​​controlling the market by supplying all vacant properties is not a correct notion of market management.

Empty house tax rate

Also, according to the law, the owners of vacant residential units are not taxed for up to four months in each tax year, but if the property is vacant for more than four months, they are taxed on a monthly basis equivalent to rent, so that in the first year, the equivalent 6 times the related tax, in the second year 12 times the related tax and from the third year the property is empty and more, equivalent to 18 times the related tax, they have to pay taxes. The legislature has also decided that new units will be taxed after 12 months and in mass-produced projects after 18 months from the end of the construction period specified in the construction permit. Of course, the legislature has also stipulated for the owners who change their property to register new information in the real estate and housing system of the country within one month after any change in the residence or sale and purchase of the unit under their ownership. Otherwise, for each month of delay, the new housing unit will be subject to a penalty equivalent to the first year tax.

Tax-exempt property conditions

According to the report, according to the law, students, employees and other persons determined by the executive regulations of this article, in case of residence in a city other than the main and secondary residence of the family, only by providing justifiable documents, the possibility of registering another residential unit is exempt. They have taxes. Also, the residential unit of employment of owners of classes, businesses, institutions or active companies that are not prohibited from working in residential units, will be exempt from tax provided that the information is registered in the real estate and housing system and approved by the Tax Affairs Organization and the Social Security Organization.