Local governments have significantly raised the current value of land in recent years as part of efforts to narrow the gap between the government-designated cost and market value of real estate, but the move will increase the tax burden borne by home sellers, analysts said yesterday.
From next year, home sellers will have to pay higher taxes for land value increases when closing deals, in keeping with the new policy of land evaluations reflecting market changes.
City and county governments set a current value for land in their respective administrations on a yearly basis.
“The annual adjustment has become an important policy tool for the government to help rein in property speculation” when housing prices fail to respond to tightening measures, Sinyi Realty Inc (信義房屋) head researcher Stanley Su (蘇啟榮) said.
The Taipei City Government has announced an increase of 13.23 percent on average — the steepest adjustment since 1992 — for current land value that will take effect next year in a bid to catch up with increasingly unaffordable home prices, Su said.
The city government’s designated land value lags far behind market prices, thereby easing holding costs and tax burdens for property speculators, critics have said.
New Taipei City (新北市) has raised the current value of its land for next year by 17.45 percent, the fastest pickup since 1991, to match soaring land and property costs in the nation’s most populated city, Su said.
The Ministry of the Interior has announced plans to progressively increase designated land prices to 90 percent of its market value in 2015, having already achieved 85 percent in most parts of the nation this year, Sinyi said.
“Land in Taipei and New Taipei City may hit the 90 percent target following the latest adjustments and the municipalities’ respective authorities will likely raise the value further next year if the property market remains unharmed,” Su said.
Land officials in Taoyuan County have suggested imposing a 20 percent hike in the land value next year, while Greater Taichung authorities put the adjustment at between 20 and 25 percent, the Greater Kaohsiung Government at more than 10 percent and Greater Tainan a range of between 5 and 10 percent.
That would add to the 52 percent increase in designated land value seen in Taipei over the past four years, as well as the 69 percent in New Taipei City, the 53 percent in Taoyuan and the 60 percent in Greater Taichung, Sinyi added.
Still, the rates of increase are lagging behind the pace at which home prices are rising in those areas, with Taoyuan seeing housing prices grow 73 percent during the same period, the broker said.
Evertrust Rehouse Co (永慶房屋) said the price registration requirement helped guide the annual adjustments, although the government has denied plans to tax properties based on the data.
“The value hikes may indirectly serve as ‘the last mile’ for property taxes based on real transaction data,” Evertrust spokesman Andy Huang (黃舒衛) said.