Sat, Dec 04, 2010 - Page 12 News List

Tax planned to curb property speculation

CHANGES:According to one newspaper report, the tax could be as high as 30 percent, although a government spokesperson says a rate has yet to be decided

By Chinmei Sung and Adela Lin  /  Bloomberg

Taiwan is considering a new property tax on real estate sold within a year of purchase and plans to revise land valuation rules to further quell the risk of overheating, the government said.

The tax will be aimed at investment properties and not those who own their homes, said Lee Ching-hua (李慶華), chief secretary at the Ministry of Finance.

Land valuations will also be revised more regularly to ensure taxes reflect market changes, said Wang Ching-hsiu (王靚琇), a deputy director of land department at the Ministry of the Interior.

“A new tax burden should discourage short-term investors from speculation in the property market and could help curtail prices,” Cheng Cheng-mount (鄭貞茂), chief economist at Citibank Taiwan Ltd (台灣花旗), said by telephone yesterday.

Previous credit tightening measures have failed to curb real estate prices, Cheng said.

The central bank on Sept. 30 increased its benchmark interest rate by 0.125 percentage points for the second time this year after a jump in home prices fueled concern the nation’s economic recovery may stoke a property bubble.

Prices in the capital rose 7 percent from December last year to the end of September, said Stanley Su (蘇啟榮), an analyst at Sinyi Realty Co (信義房屋).

The tax on property sales could be as high as 30 percent, the Chinese-language Economic Daily News reported yesterday, citing an unidentified official at the Ministry of Finance. Lee said the ministry hasn’t decided on the tax rate.

A gauge of 36 construction and building companies in the TAIEX fell 2 percent at the close of trading yesterday, the worst performer among 28 industry groups. Farglory Land Development Co (遠雄建設), the nation’s biggest property company, lost 1.6 percent, the most in more than a week. Cathay Real Estate Development Co (國泰建設) dropped 2.5 percent, the most since Nov. 15. Prince Housing & Development Corp (太子建設) retreated 2.7 percent.

The government also plans to revise its so-called published property values every year starting as early as the second half of next year, Wang said. The benchmark for annual real estate taxes is currently revised every three years.

The so-called declared land values, used to calculate taxes on the increase in the worth of properties, will be revised when necessary to bridge the gap with current market prices, she said. Those valuations are now revised yearly.

“We will act to enhance taxation fairness as investors who buy and sell land within the same fiscal year won’t be taxed against gains under current land value increment tax rules,” Wang said.

This story has been viewed 2911 times.
TOP top