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Yes, the analysis of Tehran's property market is included in our pack
Tehran property transactions involve multiple taxes and fees that can significantly impact your investment returns.
Understanding these costs is crucial for any property buyer or investor in Tehran, as they range from minimal annual property taxes to substantial transfer taxes of up to 15% for new buildings. The Iranian tax system combines national regulations with municipal charges, creating a complex structure that varies based on property type, transaction value, and holding period.
If you want to go deeper, you can check our pack of documents related to the real estate market in Iran, based on reliable facts and data, not opinions or rumors.
Tehran property taxes are relatively low, with minimal annual property tax rates but significant upfront costs including 5-15% transfer taxes and various municipal fees.
Capital gains taxes apply to properties sold within five years, with rates ranging from 20-40% for short-term holdings, while rental income enjoys exemptions for properties up to 150 square meters.
| Tax/Fee Type | Rate | When Applied |
|---|---|---|
| Annual Property Tax | Minimal/Negligible | Annually |
| Property Transfer Tax | 5% (existing) / 15% (new) | At purchase |
| Registration Fee | 0.5% of property value | At transfer |
| Stamp Duty | 0.5% of property value | At transaction |
| Capital Gains Tax | 20-40% (short-term) | At sale |
| Rental Income Tax | 15-25% (progressive) | Annual on rental income |
| Inheritance Tax | None | N/A |
What is the annual property tax rate in Tehran and how is it calculated?
Tehran's annual property tax rate is extremely low and often negligible for most property owners.
The annual property tax contributes only 1-1.5% of Tehran Municipality's total income, making it one of the lowest property tax burdens globally. This minimal rate reflects Iran's approach of generating municipal revenue primarily through development charges and construction fees rather than ongoing property taxation.
As of September 2025, most residential property owners in Tehran pay virtually no annual property tax. The calculation method involves assessing the property's municipal valuation, but the rates applied are so minimal that the resulting annual tax amounts to negligible sums for typical homeowners.
This low annual tax structure makes Tehran attractive for long-term property holding, as ongoing ownership costs remain minimal compared to many international markets.
What is the property transfer tax when buying or selling real estate?
Property transfer tax in Tehran varies significantly between existing and new buildings, with rates of 5% and 15% respectively.
For existing buildings, the transfer tax is set at 5% of the transaction value. This applies to previously owned residential properties, apartments, and houses that have been occupied or sold before. The tax is calculated on the official transaction price registered with authorities.
New buildings face a substantially higher transfer tax of 15% of the transaction value. This higher rate applies to properties being sold for the first time by developers or construction companies. The significant difference in rates aims to generate more revenue from new development activity.
The transfer tax is typically paid by the buyer during the official transfer and registration process. This represents one of the largest upfront costs when purchasing property in Tehran, especially for new constructions.
What is the registration fee at the notary office when a property changes hands?
The registration fee at Tehran's notary offices is set at 0.5% of the property's official value.
This fee covers the administrative costs of officially transferring property ownership through Iran's Land Registry Office system. The calculation is based on the property's registered transaction value, not market value, which can sometimes be lower.
The buyer typically pays this registration fee as part of the property transfer process. The fee must be paid at the time of registration to complete the legal transfer of ownership.
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This 0.5% fee is mandatory for all property transactions in Tehran and cannot be avoided or deferred, making it an essential cost to factor into your property purchase budget.
What are the municipality fees for property ownership or construction?
Tehran Municipality generates most of its revenue through development charges rather than annual property ownership fees.
| Fee Type | Application | Payment Timing |
|---|---|---|
| Construction Permits | New construction projects | Before construction starts |
| Code Violation Compensation | Buildings exceeding regulations | During construction or inspection |
| Bonus Density Fees | Extra floor area beyond base allowance | During permit process |
| Balcony and Parking Compensation | Additional balconies or parking spaces | During construction approval |
| Infrastructure Impact Fees | Large developments | Before construction permit |
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What are the annual maintenance or service charges applied by the municipality?
Tehran Municipality does not impose universal annual maintenance charges on all property owners.
Unlike many international cities, Tehran does not have a standardized annual municipal service fee that all property owners must pay. Instead, the municipality finances urban services through targeted programs and development charges.
Occasional fees may be levied for specific urban services, primarily waste management or infrastructure improvements in certain districts. However, these are not regular annually calculated charges that apply to most homeowners.
Property owners in Tehran benefit from this system as it keeps ongoing ownership costs minimal, with most municipal revenue generated from development activity rather than existing property owners.
What is the capital gains tax if I sell a property in Tehran?
Iran introduced capital gains tax on property sales with rates depending on how long you hold the property.
Properties sold within one year of purchase face capital gains tax rates of 20-40% on the profit. This high rate discourages short-term speculation in Tehran's property market and aims to stabilize prices.
For properties held between two to five years, 50% of inflation-driven price gains are considered taxable income. This partial taxation acknowledges that some price increases result from Iran's inflation rather than real value appreciation.
Properties held over five years have their entire price increase adjusted for inflation subjected to tax, but the longer holding period typically results in more favorable effective tax rates due to inflation adjustments.
This capital gains tax structure encourages longer-term property investment in Tehran rather than short-term speculation.
What is the inheritance tax on property passed down to heirs?
Iran currently has no specific inheritance tax on property transfers to heirs.
Inherited property in Tehran is not subject to inheritance tax, making it attractive for generational wealth transfer through real estate. This policy encourages family property ownership and long-term investment strategies.
However, inherited properties may still be subject to standard transfer and registration fees when ownership is formally transferred to heirs. These fees follow the same 0.5% registration fee structure as regular property transactions.
The absence of inheritance tax makes Tehran property particularly appealing for families looking to build generational wealth through real estate investments.
What are the stamp duties or document fees for property transactions?
Stamp duty in Tehran is charged at a flat rate of 0.5% of the property value.
This stamp duty applies to all property transactions and covers the cost of official documentation and legal processing. The fee is calculated based on the property's registered transaction value.
The buyer typically pays this stamp duty as part of the transaction costs. This fee is separate from the registration fee and transfer tax, adding to the total upfront costs of property purchase.
It's something we develop in our Iran property pack.
The 0.5% stamp duty rate is fixed and applies uniformly across all property types and values in Tehran.
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What are the fees for utilities connection and infrastructure when building or buying?
Utility connection fees in Tehran vary widely depending on property type, location, and infrastructure requirements.
Water, electricity, and gas connection fees are paid to respective utility providers and can range from several million to tens of millions of Iranian rials for new buildings. The exact amount depends on the property's size, location, and existing infrastructure availability.
These fees are typically settled during construction for new properties or immediately after purchase for existing properties requiring new connections. Buyers should budget for these costs as they can be substantial, especially for larger properties or those in areas with limited existing infrastructure.
Infrastructure fees may also include sewerage connections, telecommunications, and other municipal services depending on the property's location and development status.
These connection costs are one-time fees but represent significant upfront expenses that property buyers must consider in their investment calculations.
What are the annual waste collection or local service fees charged to property owners?
Waste collection fees in Tehran are not standardized and vary by building size and district.
1. District-based variation in waste collection costs and fee structures2. Building size affects the amount of waste collection charges3. Municipal allocation covers most waste management costs rather than direct homeowner fees4. Some zones require property owners to pay fixed annual amounts5. Fee structures differ between residential and commercial propertiesMost waste collection costs are funded through municipal allocations rather than direct charges to individual property owners. However, in some districts, owners may pay a fixed annual amount for waste collection services.
The lack of standardized waste collection fees means property owners should check with their specific district municipality to understand local requirements and costs.
What is the income tax rate if I rent out my property in Tehran?
Rental income tax in Tehran offers significant exemptions for smaller properties while applying progressive rates to larger rental incomes.
Residential properties up to 150 square meters in Tehran are completely exempt from rental income tax. This exemption covers most standard apartments and smaller houses, making small-scale rental investment very tax-efficient.
For properties exceeding 150 square meters or higher rental values, net rental income is taxed at progressive rates of 15%, 20%, or 25% depending on the annual rental value. The tax applies after a 25% fixed deduction for expenses, reducing the effective tax burden.
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This tax structure makes Tehran attractive for rental property investment, especially for smaller properties that fall under the 150-square-meter exemption threshold.
What are the penalties or late fees if I don't pay these taxes and charges on time?
Late payment of property-related taxes and fees in Tehran incurs penalties that vary by agency and payment type.
| Payment Type | Penalty Structure | Calculation Method |
|---|---|---|
| Municipal Taxes | Interest + fines | Daily/monthly basis |
| Registration Fees | Administrative penalties | Fixed amounts or percentages |
| Utility Charges | Service disconnection + fees | Per provider policies |
| Transfer Taxes | Interest on overdue amounts | Compounded until settlement |
| Capital Gains Tax | Tax authority penalties | Case-by-case assessment |
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Tehran's property tax structure offers significant advantages for long-term investors with minimal annual costs but substantial upfront transaction fees.
The 150-square-meter rental income exemption and lack of inheritance tax make Tehran particularly attractive for family property investment strategies.