Iraq's Real Estate Tax Law imposes a basic tax of 10% of the annual revenue of all real estate, in addition to a progressive additional tax calculated on a property owner's income exceeding 750 thousand dinars, at rates ranging from 5% to 20%, after deducting 10% of the annual revenue as maintenance and depreciation expenses before the tax is calculated.

The Basic Tax on Real Estate

Real Estate Tax Law No. 162 of 1959 provides that a basic real estate tax of 10% of the annual revenue is imposed and collected on all real estate, subject to the exemptions set out in the law.

The Progressive Additional Tax

In addition to the basic tax, an additional real estate tax is imposed and collected on a taxpayer's total real estate income exceeding 750 thousand dinars, including their livelihood share of endowed (waqf) properties, at the following rates:

Withholding the Tax From Rent

To further secure collection, the law allows the Minister or their delegate to require a tenant, if it is a person or an official or semi-official institution, to deduct the tax due on the property it rents at a rate no less than the basic tax rate from the rent payable to the landlord, and to hand it over to the relevant financial departments, with the tenant having the right of recourse against the landlord for the tax amount it paid.

Co-Owners' Liability for the Tax

If a property is owned by more than one person, the tax is paid by one of the co-owners, who has the right of recourse against the other co-owners to recover what they paid on their behalf, each in proportion to their share; if the tax authority is unable to locate one of the co-owners, the tax is collected from the occupant of the property, and if the property is vacant, the authority may lease it for a period sufficient to secure collection of the tax due.

Assessment Committees and the Validity of Valuations

Property revenue is assessed by assessment committees formed by order of the Minister or their delegate, which announce the date the general assessment begins; this assessment remains valid for 5 years, while individual new or amended valuations made after an objection also remain valid, subject to the exemptions prescribed by law.

Deducting Maintenance Expenses Before Calculation

A rate of 10% of each property's annual revenue is deducted for maintenance and depreciation expenses before the real estate tax is calculated, so that both the basic and additional tax are calculated on the net revenue after this deduction, not on the gross revenue.

Exemptions From Real Estate Tax

The law fully exempts residential dwellings whose rental value does not exceed 200 dinars and which are located in the cities of Baghdad, Basra and Mosul, and it also exempts newly constructed properties and floors from the basic and additional tax for 5 years from the date their construction is completed, as determined by the assessment committee. In addition to these cases, an owner-occupied house and residential apartment are exempt from the real estate tax imposed under the law, and this exemption also applies to a house or residential apartment occupied by a purchaser for an occupancy period not exceeding one year from the date of occupancy.

Legal References