New crisis hits Iraqi real estate market after 100% tax

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[size=52]New crisis hits Iraqi real estate market after 100% tax[/size]

[size=45]The decision to increase the real estate transfer tax in Iraq was a shock to the real estate market, which was already suffering from stagnation and conflicting prices that had become very high compared to the income of the majority of Iraqis, at a time when the country is suffering from a severe crisis in housing units.[/size]
[size=45]With the increase in population density, Iraq needs to build 3 to 5 million housing units to control the housing crisis, while the government has announced the establishment of 52 new residential cities in most Iraqi governorates, in addition to residential complexes and various loans for building, renovating and purchasing housing units.[/size]
[size=45]Surprisingly, the government decided to impose a new increase in the real estate transfer tax in Iraq, according to economic expert Nabil Al-Marsoumi.[/size]
[size=45]Al-Marsoumi stated in a post on Facebook that “there is a new increase in the property transfer tax from 40% on residential property to 100% on commercial property, which will lead to an increase in house prices and a stagnation in the real estate market.”[/size]
[size=45]Al-Marsoumi published a document issued by the General Tax Authority regarding the imposition of new taxes based on the Cabinet’s decision.
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In turn, Abu Ali, a real estate shop owner in Baghdad, believes that “the decision to increase the real estate transfer tax in Iraq will create many fluctuations in the real estate market.”[/size]
[size=45]Abu Ali said, “The increase in the tax will be reflected on the seller and the buyer, which will lead to a significant increase in the price of the property offered for sale,” indicating that “there has been a major recession that has affected the real estate market in Iraq for a long time, with many reasons, but the most prominent of which is limited to the increase in the price of the property due to its double its real price.”[/size]
[size=45]house price increase[/size]
[size=45]Meanwhile, Professor of International Economics, Nawar Al-Saadi, believes that imposing a new tax on the real estate market in Iraq could actually lead to “increased house prices and a stagnation in the real estate market, at least in the short term.” He believes that this tax, which aims to re-evaluate the value of real estate and impose a 5% rate of annual revenues based on the estimated value of the property, comes at a time when the real estate market is facing multiple challenges, including “rising costs and the inability to meet the demand for housing, especially for those with limited income.”[/size]
[size=45]Al-Saadi attributed this to “the high demand for homes and the insufficient supply.”[/size]
[size=45]Real estate prices have seen sharp increases in recent years. With these taxes, the cost of owning and investing in real estate may increase, putting a strain on buyers and discouraging some from entering the market.[/size]
[size=45]Al-Saadi pointed out that “investors may resort to raising prices to compensate for the additional cost resulting from taxes, which exacerbates the housing crisis and makes it more difficult for citizens to obtain homes at reasonable prices.”[/size]
[size=45]These measures also come in light of the government's efforts to solve the housing crisis by building new residential cities, but these projects need a long time to translate into an actual reduction in prices.[/size]
[size=45]Many of these projects are funded by foreign investments, such as the Ali Al-Wardi and Al-Jawahiri cities, which are among the largest housing projects, but building these cities will take years, according to Al-Saadi.[/size]
[size=45]Al-Saadi said that despite the importance of these taxes in improving the state’s revenues and regulating the real estate sector, “the government must adopt a balanced approach that takes into account citizens’ purchasing power and urgent housing needs, especially with the high population growth rates.”[/size]
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