Journal of Tax Research

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In designing the tax system in the housing and real estate sector, increasing the efficiency and optimal allocation of resources in the urban area, redistribution of income and wealth, reducing the incentive for speculation and increasing tax revenues of national and local governments should be considered. Accordingly, with the expansion of tax bases and reduction of exemptions, it is possible to reduce the tax burden on the state budget on individuals and manufacturing enterprises, and will prevent the diversion of investment decisions into trading activities. Therefore, the design and implementation of an efficient and fair tax system in the real estate sector based on the prevailing global patterns, in which the period of asset holdings, the range of inclusion, the basis of valuation, the tax rate, the threshold of exemptions and regional exemptions is necessary to be considered. In this study, the effects of the tax on the return and gain of capital in the framework of the general equilibrium model on prices and market volatility are analyzed. Then, the potential tax capacity in the real estate and housing sector is estimated. The results of the mathematical model indicate that increasing the tax rate on the return on capital, will lead to higher housing prices, but the tax on capital gain, housing prices, and volatility will be lowered. The results also indicate that the tax performance in the housing and real estate sector was not consistent with its potential capacity.

Keywords: Real Estate Tax, Capital Gain, Trading Activities, General Equilibrium Model

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